Sat, 08 Mar 2008

A Funny Kind of Antagonists

One of the persistent myths about the conduct of our state government is that the Governor and Assembly are two poles of a struggle. The idea is somehow that the Governor is engaged in a titanic battle for control over our government, pushing to cut expenses and hold the line on taxes, and Democrats in the Assembly are thwarting him at every turn.

This is, however, absurd in almost every particular, a fairy tale that bears almost no relation to what really goes on under that big white dome.

Here's an interesting story about 2006. During that year, policy makers were worried about a $100 million deficit. (Those were the good old days, weren't they?) Until the year before, lottery proceeds had been growing by $25-30 million every year, for years. But in 2005, revenues were down $11 million from the projections. The previous three years of revenue growth from the lottery were 19%, 9% and 6%. Lottery revenues growth was clearly leveling off.

What did the revenue estimators do? They predicted 12% growth in 2007, and 31% in 2008. This is well past "wildly optimistic" and into the realm we budget nerds call "barking mad" when we're feeling charitable, and "outright lying" when we're not. It's hard to imagine someone typing that number into a spreadsheet without giggling. Maybe he or she did, I don't know. But I do know it's fair to point out the ways in which this crazy prediction served the ends of people in power.

Most obviously, this served the Governor. He needed to get a balanced budget in order to run a successful re-election campaign against Charlie Fogarty. He got it, and he won by a nose. But what about the legislature? Why on earth would they have offered this gift to their "enemy"? In 2006, House Speaker William Murphy was pushing his plan to cut the taxes of the wealthiest Rhode Islanders by around $100 million, phased in over five years (we're in year three now, with the most expensive years still to come). He needed a balanced budget so that calling for a huge tax cut would not appear, well, insane.

In other words, to get their tax cut plan passed, the House leadership sold out Charlie Fogarty. He was left trying to make the case that the Governor's fiscal management had been a disaster while the other prominent Democrats smiled and looked at their shoes. Then, as soon as the election was over, the November Revenue Estimating Conference let us all know about the sham.

The Governor still rails against the Assembly, but it's just habit, I think. There is little of substance that they haven't given him recently. In the last couple of years, the Assembly gave the Governor a massive pension reform bill, and they covered him by cutting state aid to education even more than he'd suggested last year.

There are certainly budget cuts that haven't been as deep as the Governor would like, but as I wrote about a couple of weeks ago, it's simply not feasible to balance the budget by cutting entitlements alone. This is a fact of arithmetic: Entitlements are simply not as expensive as you think, and we're deeper in the hole than that. The stuff about the legislature wriggling in the iron grip of the social service lobby is pure fantasy. And a lot of the Governor's plans for personnel reforms seem to imagine somehow that there aren't unions at all. Like them or not, realistic management means you have to acknowledge that unions exist.

Now we come to 2008. Having successfully created a budget crisis for us, the Governor introduced a bill, via Rep. Carol Mumford (R-Cranston,Scituate) that would give him extraordinary powers to slash spending without any oversight at all by the Assembly. Steven Costantino (D-Providence), the chair of House Finance, and probably the second-most influential member of the Assembly, endorsed the bill, signing on as a co-sponsor.

So this is the situation: The Assembly and Governor have together created a tremendous budget crisis. The crisis was caused by tax cuts of the past ten years, exacerbated by the economic downturn (not the other way around). Now that we're in a crisis, the Governor is demanding the right to slash spending without accountability to anyone, and the Assembly leadership seems perfectly willing to hand it over. Does that sound like antagonists struggling for primacy?

At a hearing on the bill last Thursday, there was substantial pushback on this, even from members of the Finance Committee. A visibly surprised Costantino backpedaled, and seemed to endorse a much less sweeping approach. Contacted on Friday, though, his office could offer no specifics.

In its way, the hearing may have been one of the best things to happen on Smith Hill this year. Speaker Murphy, Majority Leader Gordon Fox and Costantino exert close control over a lot of House business. Under their leadership, Rules have been changed to restrict debate, and important bills rushed. It's high time that Assembly rank and file found their voice to push back.

And remember, while this fiscal crisis brews, while school districts around the state are laying off staff and cutting programs, while the legislature debates whether to grant the Governor these extraordinary and undemocratic powers, a few thousand of the wealthiest Rhode Islanders will get a tidy cut in their taxes this year. But for 19 out of 20 of you reading this, tough luck.

00:23 - 08 Mar 2008 [/y8/cols] link

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