Rhode Island Policy Reporter

What about taxes?

I asked the likely gubernatorial candidates what they think about Rep. Scott Guthrie's proposed amendment to the budget last Wednesday. This amendment would have frozen the "flat tax" rate at the current 7% limit and appropriated the savings to revenue sharing for cities and towns. The amendment failed 23-52. Do they concur with the House leadership that this was not a good idea?

Frank Caprio:

"We need comprehensive tax reform, and we need to start by thinking about having a singular, consistent approach, not a dozen continuously changing tax policies. Our tax strategy needs to focus on helping businesses, particularly small businesses, create jobs."

Elizabeth Roberts:

"No one element of tax policy can be considered in isolation. What RI needs is a coherent, integrated tax policy that meets the goals of: fairness to all Rhode Islanders, regional competitiveness, lowering the tax burden on the middle class and working Rhode Islanders, and supports a comprehensive economic development plan."

These, of course, are not what you'd call answers to my question. Patrick Lynch and Lincoln Chafee both declined to comment, both saying it was because they're not official candidates yet.

In other words, none of them were willing to express an opinion about how our government ought to be funded.

Investment: It's not all good

I just finished reading an interesting report, out last week from the Rhode Island Coalition for the Homeless and RI Legal Services, about the plague of foreclosures and evictions upon us. It's an interesting read, and filled with useful maps about where evictions have happened, and which banks are doing them. (See rihomeless.org.)

Sadly, many foreclosures happen on rental property, and many banks routinely evict all the tenants when that happens. Since sales rates are way down, lots of these properties end up boarded up and vandalized, while the evicted families end up, well, evicted. It is just as dumb as it sounds, but these banks have chosen not to be in the property-management business, an understandable business decision -- if you ignore the damage they're doing to our state.

The California Budget Challenge

Check out the California Budget Challenge. It's good for one's humility.

Bill numbers for Covanta trash bill

The bills that would reverse Rhode Island's incineration ban and qualify waste-to-energy as a renewable energy source are H6053 and S933. Please tell your representative or senator to oppose them. Read below for more.

Like flies to a subsidy

I was passing through Portsmouth a couple of weeks ago, and couldn't help noticing that the town is now home to a second giant wind turbine, which seemed pretty cool to me. The new turbine is owned by the town, and generating electricity that the town sells to National Grid. Electricity isn't the only thing Portsmouth sells, though. They also sell something called Renewable Energy Certificates (REC).

An REC is sort of like a green blessing for a megawatt of electricity. Better yet, think of it as the bragging rights for using that green electricity. If you have the certificate, you have a legal right to claim you've used a megawatt-hour of renewable electricity. Portsmouth is allowed to issue one REC for every megawatt-hour they produce.

RECs are important because electrons are electrons, and they don't come with little labels saying how they were generated. An electron that comes out of the socket in your wall is the same whether it was generated by Portsmouth's wind turbines or by an ancient and filthy coal-fired generator in Ohio.

Dept. of Reaping What's Been Sown

On the news that George Tiller's family is not interested in being picketed, protested or shot. From the Times

Even some abortion opponents, who had long devoted their efforts to closing down Dr. Tiller's clinic, said they did not wish to see it happen under these circumstances. Last week, Troy Newman, the leader of Operation Rescue, had said that closing the clinic now would send a worrisome message. "Good God, do not close this abortion clinic for this reason," he said in an interview with The New York Times. "Every kook in the world will get some notion."

Wonder where they will have gotten it from?

The fun only lasts until the music stops

A couple of weeks ago, during a hearing at the Senate Finance committee, chairman Daniel DaPonte (D -- East Providence and Pawtucket) made some disparaging remarks about our cities and towns. In response to a witness who made a comment about how cuts in municipal aid were forcing cities and towns to raise property taxes, Senator DaPonte said, "There's no evidence that giving cities and towns more money will result in property tax cuts. We've raised municipal aid and property taxes haven't come down."

In fact, the chairman is right that municipal aid has gone up a lot, but he's wrong, too. Municipal aid grew from $28 million in 1990 to $234 million in 2008. What are the towns doing with all that money? Flushing it down the toilets in town hall?

In fact, they can't flush it because they don't get even half of it. That number serves to nurse the standard story about what's wrong with local government, but it doesn't have much to do with paying bills at town hall. You see, to make the sum as large as $234 million, the state budget writers include $135 million in reimbursement for car taxes. This is real money, certainly, but it goes to taxpayers, not towns. It does not help balance municipal budgets

My favorite part of the Cairo speech

It's a story with a simple truth: that violence is a dead end. It is a sign of neither courage nor power to shoot rockets at sleeping children, or to blow up old women on a bus. That is not how moral authority is claimed; that is how it is surrendered."

I think the moral high ground is routinely undervalued in discussions of international (and national) affairs. The contrast between South African and Palestinian history of the last 50 years could hardly be more stark.

Basic Educational Plan

Find the draft plan here.

Find the old standards here.

The official comment period for the BEP is now past, but you can see instructions for comment here, and contact information for the members of the board are here.

What's this about? See below.

But who will run the programs?

As the state continues to reel from both years of budget mismanagement and our economic woes, it escapes no one's notice that the cities and towns are reeling, too. North Providence is planning an unpaid payday for its employees, while Providence is banking on being able to tax college students.

The story is that not only is there the natural reluctance to raising taxes, but towns are wearing a shiny set of fiscal handcuffs these days in the form of a law limiting the increase in the amount of money they can collect in taxes each year. Applying this limit to the amount of money instead of the tax rate is an interesting idea. What it means is that even if the tax base increases -- if there is some new construction in town, or a new business moves in -- the increase in the town's property value can't be captured in property taxes.

This law was the brainchild of Teresa Paiva-Weed, Democrat of Newport. She is now the Senate President, so until she changes her mind about its wisdom, the towns will wear these handcuffs.

But all is not lost. Mayors and town councillors have been begging for the "tools" they need to reduce their budgets, and help is on the way from the state Board of Regents, in charge of elementary and secondary education.

The word, "tools," has a clean and abstract sound doesn't it? Imagine a razor-sharp auger or perhaps a scalpel deployed in service of delicate budget surgery. Well, maybe.

Don't work cheap

About 20 years ago, when I was earning my keep as a rope-walker and fire-eater, I prevailed on Roger, an old-time circus performer who wintered in Fall River, to give me a lesson in rigging. Roger was a cool guy, and performed atop a 120-foot sway pole that wobbled back and forth while he did handstands and the like way up there. Circus performers all do their own rigging -- because who else would you trust? -- and he turned out to be as expert as any long-term survivor of a career like that.

I went over to his place one day, and Roger showed me the sequined capes and clogs he made his entrance with. I seem to remember a chimpanzee costume, too, though I can't remember how that fit in.

Over lunch, Roger showed me how to arrange stakes in the ground to hold weight, according to what kind of ground it is and how much the load. He had tons of other useful advice for a beginner, about minimizing props and the importance of acquiring a second act. (He also had a very funny plate-spinning act that involved breaking a lot of china.) The best advice he gave me, though, he saved for last. As we made ready to part, Roger looked straight in my eyes and said, "I've given you some help here, and here's how you can return it: Don't work cheap."

Nerd stuff: Gini coefficients and the state economy

Do redistributive state taxes reduce inequality?.
Look at some data about tax increases and migration here
Ohio migration study

The Tax Cut Fairy

The value of politeness

Here is President Obama's commencement speech at Notre Dame. It has one of the best arguments for courtesy in argument that I know of—humility, consideration, and the ability to see oneself in others.

And this doubt should not push us away our faith. But it should humble us. It should temper our passions, cause us to be wary of too much self-righteousness. ...
Remember that each of us, endowed with the dignity possessed by all children of God, has the grace to recognize ourselves in one another; to understand that we all seek the same love of family, the same fulfillment of a life well lived. Remember that in the end, in some way we are all fishermen.

If you've ever composed a letter to the editor or a blog post or a paragraph of political invective, or if you intend to, read the whole thing.

Are averages what matter in school costs?

Does it matter what school you attended? Of course it does, you say. A study of Chicago schools says it might matter less than you thought, and this is relevant to today's debates about charter schools and the Mayoral Academy planned in Cumberland.

The Chicago school choice program allowed kids to enter a lottery for spots in magnet schools. A detailed look at the results of student achievement showed that the school kids got into had little or no discernible effect on student achievement. However the researchers also found that entering the lottery was a good predictor of academic success. In other words, kids who applied to go to a different school did better in school than their peers, regardless of the school they actually went to.

Why this is so is a little unclear. Maybe the kids who enter the lottery are better motivated, maybe their parents are better motivated, who knows, really? Whatever the cause, it does appear to be the case that the kids who entered the lottery were the better students. (A study followup can be found here.)

This is relevant because last week there was a hearing on a bill to require the charter schools known as Mayoral Academies to select their students at random from the entire student bodies of their school districts. The idea is that we don't want only the good students to wind up at this wonderful new academy. But the Academy-in-waiting opposed it, as did the Charter School alliance and the Department of Education.

Banks in charge

A few weeks ago, I wrote that while the economy won't run without banks, we shouldn't let banks run the economy. Last Thursday, we saw evidence.

First, bank lobbyists successfully killed the "cramdown" provisions of the bankruptcy reform legislation in the Senate. Cramdown is an unmusical term for allowing a bankruptcy judge to modify the terms of a home mortgage. You may not be aware that a judge can modify the terms of a loan for a business or a vacation home or a yacht, but not a primary home. Foreclosures and bankruptcies litter our economic playing field, so it makes some sense to reduce these.

Not to the banks. Bank lobbyists (with the exception of Citigroup's) insisted that the "moral hazard" was too great, and that people would be going bankrupt willy-nilly if this passed, to get their mortgage terms changed. This, of course, is both inane and hypocritical, too. Inane because going into bankruptcy is hardly the kind of thing anyone does lightly. Hypocritical because the bank lobby's position on issues of their own moral hazard (i.e. unaccountable executive pay) is that it's simply not a problem, even though the evening news continues to scream otherwise.

But no matter. As Sen. Dick Durbin (D-Il) said about his Senate colleagues, "Banks own this place." Jack Reed and Sheldon Whitehouse voted right, but only 43 other Democrats did, and so the measure went down to defeat. So that wave of foreclosures will continue to wash over us.

Choice and Chicago Public Schools

The original study of the school choice program in Chicago, Cullen, et al, was written up in Steven Levitt's book Freakonomics. A follow-up in more depth can be read here.