Re: Budget Thoughts

I certainly appreciate Marc’s fair-minded and temperamentally conservative response to Governor Chafee’s budget proposal, but I think he slips into a political trap not unlike the practice of spending budgets on pet projects and then looking to debt to fund such necessities as road repair. It is insufficient to go through a budget proposals as if it were itemized lists of distinct suggestions. It is also arguably the case that general thrust is more important in judging the baseline that the governor puts forth than the specifics.
Recall the process every time Governor Carcieri included some sort of tax increase, new fee, or one-time fix in his budgets. They would give the General Assembly cover, even as the legislature brushed aside attempts at reform, such as mandate relief. The same will happen here, only Chafee has extended the tax-and-fee-increase cover beyond what even some in the General Assembly might have wanted, and he’s barely pushing for reforms.
His 1% tax on currently exempt items has morphed into a 1% tax on sensitive items like clothes, heating fuel, and textbooks and a 6% tax on less sensitive items like hair cuts and auto repairs. His pension reforms are more of a request, subject to negotiation, with real changes pending further review, posturing, and tribal dances for a miracle rain. His savings in other areas, such as health and human services, are the typical illusory promise of better efficiency and oversight.
As for the corporate tax, the problem with the combined reporting proposal is that the details remain the very-complicated devil. It’s all in how the state figures out its share of a corporation’s tax once everything is combined. And with regard to the balance of rates and credits, all one needs to know — all one needs to know for the entire budget, really — is that Chafee wants to increase spending on education and municipal aid while eliminating a quarter-billion-dollar-plus deficit. That can only happen if the total tax and fee burden on Rhode Islanders and its economy increases.

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