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.

Budget Demystification!
Fiscal Derring-Do!
Economic Jiggery-Pokery!

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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.


Creative Commons License Tom Sgouros

Wed, 30 Mar 2005

Pension reform

More e-news from the Governor:

Pension Reform Now

Representatives from cities and towns around Rhode Island rallied today at the State House to demand that the General Assembly take action on pension reform.

The state pension system is in crisis. State contributions to the pension system for state employees and teachers are increasing at an unsustainable rate. Meanwhile, Rhode Island 's cities and towns are struggling under the burden of skyrocketing costs.

Of course, the pension costs are higher than they need to be, due to the Pension board's refusal to change allocation decisions made in 2001 — before the stock market tanked.

Rep. Susan A. Story, a Republican who represents Barrington and East Providence , organized the "Pension Reform Now" rally. All of the Republican House members as well as some Democrats have signed on in support of the "Pension Reform Now" rally.

Rep Story says that Rhode Island taxpayers are paying the price for a pension system that has spiraled out of control. She noted that taxpayer contributions for state employees and teachers will increase by $94 million, to $278 million in the next fiscal year unless the General Assembly passes pension reform this year.

Pension costs this year are $20 million higher than they need to be. Essentially, the Governor is demanding that all the towns and the state, too, seem more fiscally sound than anyone requires them to be. It fits his agenda that pension costs seem unmanageably high. If the cost of this charade is the occasional music class, what does he care?

Governor Donald L. Carcieri has warned of a looming pension crisis since he first took office. He has proposed a pension reform plan that will save Rhode Island taxpayers more than $256 million over the next five years. In the next fiscal year alone, Governor Carcieri's plan would save cities and town at least $18 million.

Pension reform is an issue that should be of concern to every taxpayer.

Pension reform is of concern to this taxpayer, but I also want some honesty in the packaging. Some of the most important decisions having to do with the pension system are made by the pension board. Those decisions routinely go unexamined, even though they may cost us all millions of dollars. And this year, they will.

See here for more information.

22:05 - 30 Mar 2005 [/y5/ma]

How to tell a radical

There are other reasons to deplore the prices of housing, besides the obvious ones. (Obvious being the housing crisis, where not enough people can afford a place to live.) Less obvious is the degree to which our economy is built on homes — buying, building and selling them. Were the price to crash, it would sure help in the affordability department, but if the economy tanks because of the crash, it will be only a Pyrrhic victory.

See here for some worrisome numbers.

Remember, it's ok to regulate markets in taxicabs and tow trucks, heating oil and hamburgers. But if you advocate regulating the market in real estate, well that makes you a radical.

10:08 - 30 Mar 2005 [/y5/ma]

Death by a thousand cuts

An article in the Projo notes that my town is managing to hold this year's property tax increase to less than 4%. And I suppose congratulations are in order. That is, if you think that devastating school programs, hiking recreation fees, cutting fire and police departments, and cutting library hours deserve congratulations.

Like many towns, ours finds the value of commercial property isn't rising as fast as the value of residential property. So through the vagaries of the bizarre revaluation process, we granted Wal-Mart a $100,000 tax cut last year. Electric Boat a division of General Dynamics, got more. This is worth slashing programs in my children's schools?

State policies (like reval rules, and aid to towns and schools) promoted by our unaccountably popular Governor, are killing our towns. (See here or here or here, and lots of other places on this site.) Town governments that just roll over in the face of these unconscionable state policies are part of the problem, not the solution, and pride that town councillors take in their "responsibility" and willingness to "make hard choices" only enables the Governor to make things still worse next year.

(Obviously federal policies have a lot to do with this, too. But the Governor has done the worst possible job of dealing with the changes in federal policy. For example, the wealthiest Rhode Islanders have received tax cuts in the many thousands of dollars. Taking back only a fraction of that would actually solve most of the state's budget shortfall. Details in the upcoming issue.)

Our prediction: all the pain you might feel if you watch local school committee and town council meetings will be worse next year. You heard it here first.

09:49 - 30 Mar 2005 [/y5/ma]

Mon, 28 Mar 2005


This is news, according to the most widely respected newspaper in the country.

And we wonder how he got elected.

13:04 - 28 Mar 2005 [/y5/ma]

Sun, 27 Mar 2005

Corn defiled in Mexico

I try not to harp on genetics all the time. But when the news comes as fast and furious as this, it's hard to help it, even when (especially when) all the articles are relegated to the back pages of the news section. It's as if people are willing to say that the existence and health of the food crops we eat is important, but, well, not as important as, say, Michael Jackson's trial.

It appears that engineered genetic modifications have been found in some corn in Oaxaca, in southern Mexico. This is a big deal, because that part of Mexico is where corn comes from. The natural ancestor of corn was came from there, and the crop is quite diverse there, too. This is one of the important wells from which we draw the food crops we eat. And now it's been fouled.

Fortunately, the fouling doesn't seem harmful, or very bad, but it's fouling nonetheless. When salt shows up in your well, you don't worry about your health (too much) but you worry about the health of your water supply. What happened once with a benign gene can happen again with a less benign gene, especially since, as the article put it, a Mexico government report suggested measures to prevent a repeat, and:

The United States' response to the report was immediate and blistering. It called the report "fundamentally flawed" and argued that the recommendations did not flow from the panel's scientific conclusions and undercut provisions of the North American Free Trade Agreement. "If implemented, these recommendations would unnecessarily limit Nafta farmers' access to high-quality U.S. corn exports, as well as the environmental benefits that biotech corn provides," a statement read.

Ok, it's good for business to sell corn to Mexico. But who is looking out for the interests of corn? We pretend we know all the ins and outs of corn genetics, but it's just not true. Why do we allow corporations (which don't themselves eat) make decisions for us about such fundamental matters of health as food?

17:18 - 27 Mar 2005 [/y5/ma]

Sat, 26 Mar 2005

Right on schedule

Down below, about the shameful carelessness and false confidence of the regulators of genetically modified food, I wrote this:

Bland assurances like this are only trustworthy if you think that science has already discovered everything there is to know about how genes work in plants.

And what do you know? We haven't.

What a surprise. One begins to hope that news like this will inject a little humility into the debates about genetics, but it hasn't happened yet.

07:26 - 26 Mar 2005 [/y5/ma]

Numbers fudge, yum.

Oddly enough, over the past four years, the Social Security trustees have changed their methodology for economic forecasts. Even odder, the changes have been all in the direction of making their forecasts more gloomy. How peculiar. Now why on earth could they be doing that? They couldn't be doing it just to make the financial condition of Social Security seem shakier? Could they? See here for details.

07:09 - 26 Mar 2005 [/y5/ma]

Thu, 24 Mar 2005

Gov promises to shoot down child care union

In one of his e-news missives, Governor Carcieri does a pretty good job of both explaining why he doesn't want a child-care workers union and why one is probably essential.

"I am determined to defend the state's child care program, to defend our children and to defend Rhode Island taxpayers," the Governor concluded. "I will veto this bill because it is bad for our most vulnerable children, for our most needy families and for Rhode Island's overburdened taxpayers."

And later:

In the face of a $160 million budget deficit, the Governor has proposed some reforms. They include a freeze on the current subsidy rates paid to all providers until July 1, 2006. The Governor would also raise the eligibility level for child care providers to get free state-subsidized health care, and would require them to pay the same health care co-shares as RIte Care beneficiaries do.

Translation: the Governor's budget-balancing act depends on keeping poor people poor. This goes for poor people getting help from the state and — remarkably enough — it also goes for poor people who provide a service to the state.

Say what you will about teachers' unions — inflexible, archaic, undemocratic, you know the drill. But after watching my town's school committee for the past few years, I know that the only thing preserving any semblance of real education is the contractual obligations to the unions. Everything else has been slashed to the bone, or past. I can't understand why anyone would think that without contractual obligations about class size my children wouldn't wind up in classes of 50.

11:30 - 24 Mar 2005 [/y5/ma]

Wed, 23 Mar 2005

What are we eating?

Syngenta, one of the world's biggest food and chemical companies, admitted recently that it had accidentally sold corn with unapproved genetic modifications. According to an article in the journal Nature, Syngenta let the wrong genes loose for about four years before anyone noticed. But of course you're not to worry, because it's only 0.01% of all the corn planted in the US those years.

But this assumes that the only transfer of genes is from parent plant to seed, which is known to be untrue. The spokeswoman for Syngenta says their admission to regulatory agencies "shows the system is working as it should do." Bland assurances like this are only trustworthy if you think that science has already discovered everything there is to know about how genes work in plants. Unfortunately, that is the basic assumption on which public policy about genetic engineering is developed.

In the same issue of Nature, there's another article article about how genetically modified canola has been found to devastate bees and butterflies in a study in the UK, just because its use creates a shift in the kinds of weeds that grow in a canola field.

There's a bit more about genetic modifications in plants and the Russian roulette we're playing with important food crops in last May's issue of RIPR. Bon appetit!

09:27 - 23 Mar 2005 [/y5/ma]

Tue, 22 Mar 2005


Back from Scotland, which is a fine place. Posting will resume. In the meantime, here's the February issue. Your support is what will make the March issue and all the rest possible. Go read last month's issue, and if you like it, why not subscribe?

13:21 - 22 Mar 2005 [/y5/ma]

Mon, 07 Mar 2005

Away for a bit

Posting will be slow for the next two weeks, while I and my trusty robot are in Scotland. In the meantime, it's state budget season. RIPR issues 1, 4 and 7 contain several suggestions about overspending and unwise spending in state government, all still valid, some more so. See below about the current (February) issue. The upcoming RIPR will contain a comprehensive plan to reform state and local taxes in the state, almost no part of which will be a surprise to regular readers.

Some more great reasons to subscribe.

09:57 - 07 Mar 2005 [/y5/ma]

Bankruptcy in the news

You read that the Senate is considering bankruptcy reform legislation, and you think, "Well good, after all those bankruptcy scandals like Enron, WorldCom, and Global Crossings, it's high time this got cleaned up." Imagine your dismay to learn that the bills under question only address personal bankruptcy, and don't touch business bankruptcy rules at all. Further imagine your surprise and distress to learn that the bill under consideration would remove protections against losing one's home.

You can read a nice run down of many of the facts of the bill here, and here.

09:47 - 07 Mar 2005 [/y5/ma]

Thu, 03 Mar 2005

Shameless plea

The current (paper) issue of RIPR contains instructions for saving $13 million from the state budget, and $7.5 million from municipal budgets. As a special bonus, there are a host of tax suggestions, any one of which would be preferable to the property tax increases we're all going to suffer under. If you're concerned about cuts to some program in the state budget, there are places to find money to offset those cuts. Find them here.

Wouldn't this be a grand time to subscribe?

10:43 - 03 Mar 2005 [/y5/ma]

Crisis by choice

I watched my town council last night insist that the school budget be cut still further than the school committee had done, and I watched the school committee sigh and vow to get back to work to do their slashing better. And I didn't hear a single one say anything to the effect of, "But what about the quality of education?" Though I did hear one town councillor talk about the importance of getting the "best quality we can afford," that's not quite the same thing. All in all, not what you would call an uplifting sight.

A couple of weeks ago, we thought the choice was between shuttering a school and ending everything one might consider non-essential. Now it seems, we'll get both. Imagine my delight: taxes up only a little and a school system in shambles.

The thing that is so galling about the school crises around the State (Providence, South Kingstown, Chariho, for example. There are plenty more.) is that these are really a crisis of choice. We are not a poorer state (or nation) than we were 15 years ago. There are storm clouds on the horizon, and we've had some upsetting economic disturbances, but we're still the richest nation in the world, by far.

I'm with Tolstoy: it's foolish to say that "we" as a people have chosen this situation. "We" do not act collectively, each of us acts individually. Talking about the choices our collective self makes is only a metaphor that gets confusing too quickly to be useful.

But nonetheless, specific state policies, chosen and enacted by popular Governors, Mayors, and State reps, have brought us to this pass. For reasons that elude me, many of these individuals managed to remain popular despite the fact that their policies were, as a matter of completely predictable course, making life more difficult for everyone, including the voters who elected (and re-elected) them.

Here's the equation: when you starve the towns of state aid, they turn to the property tax, which hits hardest the people who have the least. Is it any wonder that people are angry? That people storm their town council meetings demanding cuts in the municipal and school budgets? But flailing blindly seems only to make it worse: the Governor assumes that no tax increase is palatable, even ones that will take the pressure off the property tax.

Here's a shocker: personal income in Rhode Island tends to rise faster than inflation. The problem is not finding the money. It would not be a stretch to pay for the basic services that make life good in our state. It's always possible to find waste in a big budget, and I've been doing my best to document it where I find it. But my searches have persuaded me that, while vigilance against waste and abuse is important, the real issue of our times, that virtually no one seems ever to address around here, is not the size of our government, but how we distribute the burden of paying for it. By choosing not to discuss this, the collective we has "chosen" to use the worst possible way to fund our government. Should any of us be surprised that the result seems to be perpetual crisis?

10:00 - 03 Mar 2005 [/y5/ma]

Tue, 01 Mar 2005

Sad news for land-use planning

An article in the Washington Post (registration required) describes the imminent implosion of Oregon's land-use planning structure. Oregon has been among the leaders in the nation at protecting open space, even within its cities. You don't have to read studies to see it. Go to Denver, and drive around in the mountains, and notice that all the available scenic spots have very expensive houses on them. It's not like that in Portland. But it will be. Another victory for the free market.

18:04 - 01 Mar 2005 [/y5/ma]


Right on schedule, after RIPEC comes out with a study about tax rates, there's an article about Hopkinton's "high" tax rates.

As was written here yesterday, this is the completely predictable response to publishing data like RIPEC's. I assume that this is the outcome they wish to see.

Hopkinton has a higher tax rate because the value of the property there is low, and because there isn't very much in the way of commercial development. Many people would think that low housing costs and lots of open space is a good thing. The problem is that the way we fund local government in the state, it's not a workable proposition. So commercial development will come in to town (and two town councillors are quoted in the story talking about knocking down obstacles to further development), and probably lots of it, and probably ugly, because after all, in a contest between the aesthetic pleasure of small towns and dollars, is it any surprise who always wins?

09:04 - 01 Mar 2005 [/y5/ma]

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