Another Rabbit Hat Budget
The late-Friday release of the RI House’s budget proposal is in keeping with the overall impression one gets at first glance. At least Gov. Chafee’s budget tried to do something. The General Assembly looks most inclined not to ruffle the feathers of any significant (read: “powerful”) constituencies, and thereby continues the ratcheting effect that has brought the Rhode Island to its current condition.
Most sharply, that observation arises from the high-profile matter of the sales tax: with no reductions in rates, but with nonprescription drugs, digitally downloads (including software and other downloadable goods, travel agency services, and medical marijuana added to the list of taxable items. One can discern that the budget is a fraud simply by the fact that no controversies are immediately sparked, as if there really is no systemic problem with the way in which Rhode Island does business.
That mirage comes at the cost of gradual dehydration of our lives, as it were. Yes, that means the incremental increases in taxes and fees. It also means the way our laws affect our lives. If you find yourself unemployed, for example, the amount of the unemployment payments that you can expect are set to decrease by about one fifth. Currently, the weekly payable benefit rate is 4.65% of your highest-paid calendar quarter. Thus, if you were earning $45,000 per year, you would receive $523 per week when unemployed. This budget decreases that percentage to 3.85% over a couple of years such that, if you lose that same job after July 1, 2014, you will receive $433 per week.
What if you decide to join with an acquaintance and start a new business? Well, the budget avoided implementing combined reporting for multistate companies (although it greased the skids for future imposition). But it also adds limited liability partnerships and limited partnerships to the list of entities subject to the state’s $500 minimum corporate tax. Thus, the risk, expense, and complication of directly growing the state’s economy from the bottom up is increased at a time when people not employed by others are being pinched by high unemployment and (potentially) decreasing unemployment benefits.
If the General Assembly had attempted to pull a rabbit from its magic budgetary hat, it might have sparked some outrage and effected change (or, less likely, actually changed the state for the better). Instead, the trick is to create the illusion that nothing significant has been done at all. The danger is that, when it comes time to get off the stage and go about the business of life, the people of Rhode Island may find the rabbit dead, and of a communicable disease.