The Sad Gavel Falls; Budget Now Law… with No Credibility for Future Gubernatorial Complaints

From the governor’s office (full release in extended entry):

Governor Donald L. Carcieri today transmitted, with signature, the FY 2010 budget, citing he had no other choice with more than $200 million at stake.
In a letter to Speaker William H, Murphy, Governor Donald L. Carcieri voiced his disappointment with the budget stating, “My signing this budget is not an endorsement of it in its entirety. I had intended to allow this budget to become law without my signature, however it was delivered to my office too late to do so. I am signing for this reason: over forty million dollars of state funding, plus hundreds of millions in Federal FMAP funds are at risk if the budget does not become law before July 1st.”
“I had the option to veto this ill-conceived budget, however it was overwhelmingly approved by both the House and Senate. A veto would have required both chambers to return to override it before July 1st. It appeared highly unlikely that they would have returned, leaving us with no budget. As Governor, I was not willing to risk forfeiture of this money and the potential of creating an enormous additional burden for our taxpayers.”
Governor Carcieri underscored the lack of long-term vision by the General Assembly in crafting the budget. “My original budget proposal, which I submitted in February, balanced our immediate needs, and most significantly presented a plan to address many of the ongoing budget problems that have plagued our state for decades. My goal has always been to build a positive future for Rhode Island. Unfortunately, the General Assembly chose a short-sighted scheme with narrow political goals that addresses some but defers more far-reaching, difficult choices for yet another year.” …
In conclusion, the Governor again reiterated his decision to sign the budget was based on the potential to lose hundreds of millions of dollars in savings if not signed by July 1, 2009. “As I have said, this budget is not good for Rhode Island in the long run, and my signature should not be seen as an approval of this budget. However, given the little time left before the start of fiscal year 2010, and because of the hundreds of millions of dollars at risk, I have reluctantly signed this budget into law.”

So it was “highly unlikely” that both houses of the General Assembly would rush to override a veto? Is that judgment based solely on House Speaker Bill Murphy’s European vacation, or are there other considerations that led the governor to demur from forcing the senators and representatives to show just how vehemently they wish to let the state stagger in the wrong direction?
Sorry, governor. You signed the beast’s release papers; the blood of its victims will be on your hands as much as the legislature’s.


Governor Donald L. Carcieri today transmitted, with signature, the FY 2010 budget, citing he had no other choice with more than $200 million at stake.
In a letter to Speaker William H, Murphy, Governor Donald L. Carcieri voiced his disappointment with the budget stating, “My signing this budget is not an endorsement of it in its entirety. I had intended to allow this budget to become law without my signature, however it was delivered to my office too late to do so. I am signing for this reason: over forty million dollars of state funding, plus hundreds of millions in Federal FMAP funds are at risk if the budget does not become law before July 1st.”
“I had the option to veto this ill-conceived budget, however it was overwhelmingly approved by both the House and Senate. A veto would have required both chambers to return to override it before July 1st. It appeared highly unlikely that they would have returned, leaving us with no budget. As Governor, I was not willing to risk forfeiture of this money and the potential of creating an enormous additional burden for our taxpayers.”
Governor Carcieri underscored the lack of long-term vision by the General Assembly in crafting the budget. “My original budget proposal, which I submitted in February, balanced our immediate needs, and most significantly presented a plan to address many of the ongoing budget problems that have plagued our state for decades. My goal has always been to build a positive future for Rhode Island. Unfortunately, the General Assembly chose a short-sighted scheme with narrow political goals that addresses some but defers more far-reaching, difficult choices for yet another year.”
“Rhode Island is facing an extraordinarily challenging economic time. Over the past year, state revenues have declined significantly. Some of our cities and towns are struggling to meet payroll each week, and too many of our citizens are unemployed,” continued Carcieri.
During these challenging times, our General Assembly needed to find the courage to make the tough choices to put our state back on the path to financial health. The FY 2010 budget passed by the General Assembly makes some difficult choices, but not enough to really put Rhode Island on the path to prosperity. We must grow jobs and incomes, and to do that, we need to become more business friendly by reducing spending and our overall tax burden.
Governor Carcieri praised the General Assembly for the major pension reform passed, but criticized the General Assembly for not going far enough and for not establishing a transition to a 401K-style retirement system. “In the last few years, my administration has made significant personnel reforms, including changes to the retiree health plan, increased health care co-pays and co-shares for state employees, and a significant reduction in the state’s workforce. On the positive side, this year the General Assembly approved the most significant reform yet, with major changes to the pension system. I commend the House and the Senate for their courage in pressing ahead with pension reform, despite the overwhelming pressure from organized labor. However, we need to do more to secure our retirement system, and we must change to a defined contribution retirement system for new hires. Such a change would ensure that over time a state employee’s retirement fund would be both portable and sustainable.”
A cornerstone of the Governor’s budget proposal was significant tax reforms that would make Rhode Island more competitive and strengthen the state’s economic foundation. The General Assembly’s budget, instead, opted to treat Capital Gains as ordinary income and raise the gasoline tax. “Last June, I created a Tax Policy Strategy Workgroup that worked for months and offered several proposals that aimed at making our state more business friendly and competitive with our neighbors. I included many of these recommendations in my 2010 budget, not the least of which was a reduction in the business corporation tax rate, a restructuring and lowering of the personal income tax brackets and a significant increase in the estate tax exemption. Our corporate tax rate at 9% is the highest in New England and is discouraging to business. While the increase in the estate tax exemption to $850,000 was a move in the right direction, it was not much more than a token. However, I do commend the General Assembly for continuing the reduction in the Flat Tax Option to 6% beginning January 1, 2010.”
“Thankfully, this budget does not raise broad-based sales or income taxes. However, raising the Capital Gains Tax to the ordinary income rate is discouraging to businesses, and eliminates one area where our tax policy was more attractive than our neighbors,” continued Carcieri. “In my opinion, the General Assembly wasted the chance to embrace new tax policies that would have encouraged job growth within our existing businesses and would have had great potential to attract new businesses here. My tax reform proposals were designed to energize our economic development efforts, attract new business and grow jobs.”
Of great concern to the Governor was the General Assembly’s inaction to address the structural spending reforms at the city and town level and not passing any of his proposed reforms to help cities and towns balance their budgets. “Regrettably, the budget approved by the House and Senate does not include structural spending reforms at the city and town level. The cost of services must be reduced by local governments in order to lower the property tax burden as well as the level of state government support. By refusing to pass the 21 recommendations I proposed – that would have saved cities and towns more than $125 million every year – the cost of municipal services will continue to rise. Relief from mandates, onerous labor contracts, and a parochial view of municipal service delivery is long overdue. If state revenues do not greatly improve next year, the only choice we will have is to significantly reduce local aid much further than what was done in this budget.”
The Governor called the move to strip $70 million in state department cuts problematic and signaled the possibility for further reduction of the already overburdened state workforce and salary reductions. “The $70 million in across the board departmental cuts, without any reductions in programs and services, is problematic. With the already significant reduction of the state’s workforce and the increased demand on state services, the additional $70 million in unspecified savings will put in jeopardy existing labor agreements and most likely force further reductions in the workforce and employee compensation. My administration has begun discussing the consequences with union leadership.”
In conclusion, the Governor again reiterated his decision to sign the budget was based on the potential to lose hundreds of millions of dollars in savings if not signed by July 1, 2009. “As I have said, this budget is not good for Rhode Island in the long run, and my signature should not be seen as an approval of this budget. However, given the little time left before the start of fiscal year 2010, and because of the hundreds of millions of dollars at risk, I have reluctantly signed this budget into law.”

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Roland
Roland
11 years ago

Does anyone else see a reason to stay in this state?
As long as Weed, Connors and Murphy are in charge, none of the rest will have any power and that includes the citizens of this state.
The constituents are happy, sadly, none of the constituents are non union.
Laffey was right.
Now looking for a pointy screwdriver to stick through the soft mushy part of my skull. Maybe I’ll feel better later.

Steve A.
Steve A.
11 years ago

Based on the article, I have to disagree with this blog post and agree that the Governor did the right thing. If the facts are that the state could have potentially lost money and created an even bigger hole for itself and a veto would obviously be easily overridden, I don’t see why the Governor should play games that cost taxpayers just to make a point.
As far as I’m concerned any and all blood is on the hands of our legislature and local governments alone. Suggestions are ignored, vetos have been easily overridden in the past, spending runs rampant state wide and the tough decisions have been ignored.

Justin Katz
11 years ago

Steve,
A similar judgment has been made in one way or another every year of Rhode Island’s decline. The few hundreds of million dollars that the governor is concerned about losing are going to look like chump change come time for the Autumn financial review. I’ll wager this year, as I did last year, that this budget has a real and foreseeable deficit.
The fact that the governor has signed it will enable political noise when solutions are called for, and as another election season comes and goes, the apathetic people of Rhode Island will not have a clear picture of whom (or which policies) to hold accountable.

Steve A.
Steve A.
11 years ago

Justin,
I understand and appreciate where you’re coming from. You’re right. Come Fall we will again be faced with a hole that will probably be bigger than the previous budget’s hole. The part I think differently on is that the political noise is going to happen regardless of veto. It happens now. I’ve been told many a time how Gov Carcieri is responsible for “this and that” that is specifically budget related and 100% legislature caused.
My point is that no veto is going to make a difference when it comes to voter ignorance. If the average voter were smarter, wouldn’t we have a more balanced General Assembly and more turnover during the really bad years? The Governor’s letter stating his disapproval of the budget is almost as good as a veto and is written proof he didn’t approve this. He would have been massacred if news came out that his veto cost us millions and attention would still have been diverted from the root cause.
In the end we all know that this isn’t going to turn out well. I guess if we were at least spared further damage in the process it’s for the best.

mikeinri
11 years ago

Justin is right. The governor’s signature, not his press release, tells the story. Governor Carcieri, once again, has refused to take a stand. Perhaps in his mind, he had no choice. But that does not in any way release him of the responsibility. Is there no one willing to stand up and holler “enough!”?
Next election, Democrats will call this budget of tax increases bipartisan, and will have the governor’s signature as proof.
Governor Carcieri excited many at the recent Gaspee Day rally with his call for change. I had been discouraged by the previous actions of the governor, but his speech restored some faith. Today, even more so, I am very disappointed with the governor’s decision to sign the budget into law.

Justin Katz
11 years ago

I’m imagining two conversations: (1) Partially attentive resident: I can’t believe we’re only halfway through the year, and the state is already $400 million in the hole! Can’t they think of these things when they pass the budget in the spring? Me: Well, the General Assembly writes budgets every year that fail to address the structural problems and put superficial patches on budget holes. If they’d followed some of the governor’s suggestions… PAR: I don’t remember the governor vetoing this worthless budget. Me: Well, $200 million was on the line within a week, and Speaker Murphy was on vacation in Europe, and it really didn’t look possible for the General Assembly to override the veto, and there was no way they were going to rewrite the budget… RIFuturite chimes in: This governor’s budget raised taxes on the poor and middle class while cutting them for the rich, wasted stimulus money, and increased hardships on cities and towns! PAR: I guess we’ll all have to vote to protect our own interests. (2) PAR: I can’t believe we’re only halfway through the year, and the state is already $400 million in the hole! Can’t they think of these things when they pass the budget in the spring? Me: Well, the General Assembly writes budgets every year that fail to address the structural problems and put superficial patches on budget holes. If they’d followed some of the governor’s suggestions, it would have been better (although not ideal). At least the governor sent a message by vetoing it. PAR: Yeah. If Murphy’d really thought the budget was important, he’d have postponed his European vacation to override the veto. At least they had to scramble to make up the $200 million that the General Assembly’s lethargy cost. RIFuturite: This governor’s budget raised taxes on the… Read more »

Monique
Editor
11 years ago

… wait a minute.
If the budget had been vetoed, could the veto have been overridden with the the Speaker out of the country?

Tom W
Tom W
11 years ago

I wonder if the Speaker is opening a Swiss bank account in preparation for the coming collapse?

Pat Crowley
11 years ago

RIFuturite: This governor’s budget raised taxes on the poor and middle class while cutting them for the rich, wasted stimulus money, and increased hardships on cities and towns!
Hey, you finally managed to put some truth up here. ’bout time.

Phil
Phil
11 years ago

Roland is just crazy about Laffey and Laffey is just crazy. Roland … if you need help with the screwdriver I’m sure there are some union workers willing to assist you. I can assist you with directions to route 95 just as long as you promise not to stop in West Greenwich.

Monique
Editor
11 years ago

“I wonder if the Speaker is opening a Swiss bank account in preparation for the coming collapse?”
… as well as the RI Supreme Court’s ruling in the Irons case.

Robert Balliot
11 years ago

Has there been any decision regarding sales tax that does not directly benefit Massachusetts retailers and, by extension, the Massachusetts economy?

If Rhode Island was an isolated market, I could understand some of the decisions. East Bay residents drive through Massachusetts to get to Providence. RI residents are just minutes away from Mass and Conn retailers. Why wouldn’t the incentive be to support Rhode Island businesses and make them more competitive by affording them the same profit margin?

Roland
Roland
11 years ago

Phil, I’m still stuck on Step 1. Finding a union made screwdriver unless China is now a union!
Yeah, I just remember Laffey saying that RI isn’t ready to make the changes necessary to survive and he’s right.
Hurray for Crowley! He got one right, the budget used stimulus money to plug holes.
See? There is Hope…until Almeida takes that away too.

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