Rhode Island Policy Reporter

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A look at the lousy situation Rhode Island is in, how we got here, and how we might be able to get out.

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RIPR is a (paper) newsletter and a weekly column appearing in ten of Rhode Island's finer newspapers. The goal is to look at local, state and federal policy issues that affect life here in the Ocean State, concentrating on action, not intentions or talk.

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whole site RIPR back issues

Available Back Issues:

  • Aug 09 (38) - How your government's economic policies have worked against you. What a fake nineteenth century nun can teach us about the tea party protests.
  • Jun 09 (37) - Statistics of optimism, the real cost of your government. Judith Reilly on renewable tax credits. Review of Akerlof and Shiller on behavioral economics.
  • Apr 09 (36) - Cap and trade, the truth behind the card check controversy, review of Governor's tax policy workgroup final report.
  • Feb 09 (35) - The many varieties of market failures, and what classic economics has to say about them, review of Nixonland by Rick Perlstein.
  • Dec 08 (34) - Can "Housing First" end homelessness? The perils of TIF. Review of You Can't Be President by John MacArthur.
  • Oct 08 (33) - Wage stagnation, financial innovation and deregulation: creating the financial crisis, the political rhetoric of the Medicaid waiver.
  • Jul 08 (32) - Where has the money gone? Could suburban sprawl be part of our fiscal problem? Review of Bad Money by Kevin Phillips, news trivia or trivial news.
  • Apr 08 (31) - Understanding homelessness in RI, by Eric Hirsch, market segmentation and the housing market, the economics of irrationality.
  • Feb 08 (30) - IRS migration data, and what it says about RI, a close look at "entitlements", historic credit taxonomy, an investment banking sub-primer.
  • Dec 07 (29) - A look at the state's underinsured, economic geography with IRS data.
  • Oct 07 (28) - Choosing the most expensive ways to fight crime, bait and switch tax cuts, review of Against Prediction, about the perils of using statistics to fight crime.
  • Aug 07 (27) - Sub-prime mortgages fall heaviest on some neighborhoods, biotech patents in decline, no photo IDs for voting, review of Al Gore's Against Reason
  • Jun 07 (26) - Education funding, budget secrecy, book review of Boomsday and the Social Security Trustees' Report
  • May 07 (25) - Municipal finance: could citizen mobility cause high property taxes? What some Depression-era economists had to say on investment, and why it's relevant today, again.
  • Mar 07 (24) - The state budget disaster and how we got here. Structural deficit, health care, borrowing, unfunded liabilities, the works.
  • Jan 07 (23) - The impact of real estate speculation on housing prices, reshaping the electoral college. Book review of Blocking the Courthouse Door on tort "reform."
  • Dec 06 (22) - State deficit: What's so responsible about this? DOT bonding madness, Quonset, again, Massachusetts budget comparison.
  • Oct 06 (21) - Book review: Out of Iraq by Geo. McGovern and William Polk, New rules about supervisors undercut unions, New Hampshire comparisons, and November referenda guide.
  • Aug 06 (20) - Measuring teacher quality, anti-planning referenda and the conspiracy to promote them, affordable housing in the suburbs, union elections v. card checks.
  • Jun 06 (19) - Education report, Do tax cut really shrink government?, Casinos and constitutions, State historic tax credit: who uses it.
  • May 06 (18) - Distribution analysis of property taxes by town, critique of RIEDC statistics, how to reform health care, and how not to.
  • Mar 06 (17) - Critique of commonly used statistics: RI/MA rich people disparity, median income, etc. Our economic dependence on high health care spending. Review of Crashing the Gate
  • Feb 06 (16) - Unnecessary accounting changes mean disaster ahead for state and towns, reforming property tax assessment, random state budget notes.
  • Jan 06 (15) - Educational equity, estimating the amount of real estate speculation in Rhode Island, interview with Thom Deller, Providence's chief planner.
  • Nov 05 (14) - The distribution of affordable houses and people who need them, a look at RI's affordable housing laws.
  • Sep 05 (13) - A solution to pension strife, review of J.K. Galbraith biography and why we should care.
  • Jul 05 (12) - Kelo v. New London: Eminent Domain, and what's between the lines in New London.
  • Jun 05 (11) - Teacher salaries, Veterinarian salaries and the minimum wage. Book review: Confessions of an Economic Hit Man
  • Apr 05 (10) - Choosing a crisis: Tax fairness and school funding, suggestions for reform. Book review: business location and tax incentives.
  • Feb 05 (9) - State and teacher pension costs kept artificially high. Miscellaneous tax suggestions for balancing the state budget.
  • Dec 04 (8) - Welfare applications and the iconography of welfare department logos. The reality of the Social Security trust fund.
  • Oct 04 (7) - RIPTA and DOT, who's really in crisis?
  • Aug 04 (6) - MTBE and well pollution, Mathematical problems with property taxes
  • May 04 (5) - A look at food-safety issues: mad cows, genetic engineering, disappearing farmland.
  • Mar 04 (4) - FY05 RI State Budget Critique.
  • Feb 04 (3) - A close look at the Blue Cross of RI annual statement.
  • Oct 03 (2) - Taxing matters, a historical overview of tax burdens in Rhode Island
  • Oct 03 Appendix - Methodology notes and sources for October issue
  • Apr 03 (1) - FY04 RI State Budget critique
Issues are issued in paper. They are archived irregularly here.

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The Rhode Island Policy Reporter is an independent news source that specializes in the technical issues of public policy that matter so much to all our lives, but that also tend not to be reported very well or even at all. The publication is owned and operated by Tom Sgouros, who has written all the text you'll find on this site, except for the articles with actual bylines.


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Thu, 28 Oct 2004

A follow-up to the DOT remarks

A friend writes:

What about the matching Fed $???? Use it or lose it - right?
That's the DOT line, which presumes we can only borrow to match it. But we're the only state that routinely borrows to match it. Other states think that's a stupid idea, but that's what we do. (Even FHWA, the federal highway guys, think it's a stupid idea, which they told me in 1998. Even Capaldi himself told me it's stupid idea, but that was in 1998, before he was head of the department.)

The money is question is $30 million. We could have three times that much by restoring the income tax to the level of the bad old days of 1996. Did you know you got a 10% tax cut between 1997 and 2002? Most people didn't even notice. We ought to spend that money to get the federal funds, but we ought to do it by appropriating it and spending it, instead of bonding and eventually spending twice as much. What we do now is only digging us into a hole, just the same way my sister did with credit cards a few years ago. The reason our budget is in disarray is that we had competing tax giveaways in the 1990's, as both Almond and the legislature competed to see who could give away most. They had a golden chance then to put issues like this to rights, and they blew it.

14:56 - 28 Oct 2004 [/y4/oc]

Wed, 27 Oct 2004

New issue online

In deference to the election coming up, we've rushed the October issue onto the web site a little early. There is a question about funding DOT bonds on the ballot (Question 3), and the newsletter is at least partly relevant.

The issue looks a bit at RIPTA's budgetary woes, and at DOT's. A comparison is made...

Here's the October issue.

18:52 - 27 Oct 2004 [/y4/oc]

DOT: A reply to an editorial.

(Submitted to the Providence Journal, but to no avail.)

In a recent Journal op-ed, James Capaldi, the director of our state Department of Transportation claims that all road construction in Rhode Island depends on passage of the transportation bonds on Question 3 this November. But he is being slightly disingenuous. Road construction will not halt if the $66 million in bonds are not approved; the construction lobby employs too many people around here, and too many of them have friends in the administration and in the legislature. But what will happen if approval is not granted is that the state may have to come up with a more sensible way to fund road construction.

DOT has been funding routine construction with bonds for years, which makes it seem normal. But it's not. Among all the states, we are the exception, not the rule in the matter of debt. Lots of states borrow for this or that big road or bridge project, but we borrow $30 million every year, except for the years in which we borrow much much more (like this one). Projections have us borrowing the same amount each year into the foreseeable future.

The question is why? If we're borrowing $30 million every year, then there's no need to amortize, it's already amortized, at $30 million a year, and we should just budget for that. Roads are a kind of investment, but not one with returns--especially not roads built to replace existing ones, which is what most of the next decade's cost is for. Constant borrowing like this is a perfectly common financial strategy, but one that often ends in bankruptcy court.

The history of DOT's debt is a long one, started probably in the Garrahy administration, when a resort to borrowing was an easy way to avoid facing the true cost of the department. But successive Governors have made the problem much worse through malign neglect.

In the past ten years, DOT has dropped over 100 employees, and the amount of money it spends on construction has gone up very little: from $95 million in 1994 to $102 million in 2005. Maintenance activities over that same period have only gone from $26 million to $39 million. During that same time, federal highway funds, though they vary a lot from one year to the next, have roughly tracked inflation, going from $149 million to $207 million. But state dollars (DOT's budget minus the federal dollars, minus the money they pass along to RIPTA) going into the department have skyrocketed, going from $56 million to $104 million. We're getting a lot less for our money than we used to.

There are lots of little reasons for this--inflation, health care costs, pension adjustments--but the biggest reason is that DOT's budget is struggling under around $50 million in debt service, roughly double the $27 million from 1994. (Part of the debt service is accounted in the Department of Administration, but it's DOT's debt and is paid with gas tax money.) That is, at least half of the increase in state money applied to DOT goes to debt service. It would be much more, but for the serendipity of the tobacco settlement money, much of which was spent paying off DOT debt.

Mr. Capaldi will object that the amount of construction has actually gone way up, since last year we sold $216 million in GARVEE bonds, to be paid off with future federal highway money. This is the money going to build the access highway and freight rail to Quonset, the new Providence River bridge for I-195, and the new Sakonnet River bridge for Rt. 24. In one sense he would be correct. But construction on those projects doesn't do much for the bridge rotting away down the street from me or the intersection that needs signs near you. Nor does it do anything for the projects Mr. Capaldi lists as "likely" to be scheduled. The GARVEE bonds planned will require that one-third of the federal highway money we receive each year goes to their debt service for the next fourteen years. The DOT situation is like a family that's bought a house slightly too expensive for them: At best, they won't be eating a lot of steak in the next few years. At worst, they won't keep the house. We may finish those four projects, but all other construction is at risk for the next several years.

Six years ago, 36% of the gas tax collected went into the general fund, to fund state services like local education aid and protecting the environment. Today less than 7% goes to the general fund, a drop of more than $40 million in today's dollars. That sure would have been useful in last year's budget battles.

Mr. Capaldi knows all of this. In fact he was the one who explained it to me several years ago. But that was before he was running the department. It's not his fault that the Governor and the Legislature won't allocate the money necesary to fund necessary road construction, but he knows full well that debt isn't the only way to fund DOT, it's just the worst way.

Vote no on question 3, for saner state spending.

12:23 - 27 Oct 2004 [/y4/oc]

Thu, 21 Oct 2004

Air cargo

For the past four years, I have been touring around the country, to theatres and universities, with a one-man, one-robot show. It's been an incredible experience, and I've learned a lot, but some of what I've learned -- about airport security and air cargo -- is a bit unsettling.

Judy (the robot) is too big to fly with me as luggage, so she goes in her custom-made travelling compartment (some might call it a "crate") and flies air cargo. When she flies on airlines, she flies in the same airplanes you do.

After September 11, 2001, new rules were put in place, and in order for me to ship Judy air cargo, I had to become a "known shipper." I've passed this process three times now, for two major airlines and one air cargo company. This is what happens: an official of the airline comes to my house, and checks to make sure it exists. They ask me for a driver's license, to make sure I exist. Then we're done. They don't ask to see what I'm shipping, they don't ask what business I'm in, they don't ask for references.

This wouldn't be frightening if I knew that air cargo was being inspected, but it's not. My luggage that travels with me, containing cables, tools and computers, looks spectacular on an X-ray machine, and is routinely opened. I receive one of those little Transportation Security Agency courtesy slips, telling me that my luggage has been inpsected, every time I fly. I even invested in a new suitcase because the old one had to be tied shut, and the TSA guys, while I'm sure they're good at inspections, aren't so handy with knots. The new case is much easier to open, and it opens wider, making the inspections easier.

If my own luggage looks alarming on the X-ray machine, the robot itself would look much worse, should anyone bother to peek. Judy is 80 pounds of home-made electronics and oddly-shaped metal parts, built into a Salvation Army cabinet. She shares her crate with big coils of cable and little switch boxes I made to control her. I made it all in my basement, and it looks that way: duct tape, baling wire, scrap metal. It defies belief that anyone interested in airplane security has ever inspected that crate without my hearing about it or noticing it later.

In generous moments, I feel sure that my personal information must have been entered into some TSA database and I came out clean, and maybe that's why my shipments are deemed not worth inspection. I'm grateful, but it doesn't make me feel safer. Most of the 9/11 hijackers were clean, too.

So there you have our air safety rules: unlikely to prevent catastrophe, but they know who the shippers are. So they can blame them later? The TSA does officially acknowledge the risk, but three years after September 11, it hasn't made air cargo screening universal, and isn't planning to. Here are their words from their cargo security strategic plan released ten months ago:

TSA carefully evaluated the feasibility of physically screening 100 percent of all air cargo. Limitations of technology and infrastructure make such an undertaking impractical, from both a flow-of-commerce and resource point of view.

That is, we're not going to screen all the cargo, because it will cost too much, and it would be an inconvenience to businesses. Think about that the next time you get to the head of the long air security line and see a TSA official confiscate an elderly woman's tweezers.

I would like to live under a government that worked to address the real threats to our safety. But the evidence I see implies we live under a government interested only in the appearance of security. They don't inspect air cargo but they do make me stand in long lines and take away my nail scissors. They don't address the tremendous traffic in cargo container ships, but they do turn away Cat Stevens and muslim academics from Switzerland. They don't impose rules on chemical plant security, but they do demand access to my public library records.

President Bush's government seems to think the goal is merely to inconvenience us enough to make us think that the real threats are being addressed. For some reason, this doesn't make me feel safer.

Images of the robot can be seen at sgouros.com

23:06 - 21 Oct 2004 [/y4/oc]

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