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.


Creative Commons License Tom Sgouros

Thu, 26 Oct 2006

Referenda in November

[This is an article from the October issue, printed here because we have an election coming.]

In a few weeks, we'll have an election to vote in. Because most of the content has been leached out of the reporting of politics in America, most of us will vote on candidates without exactly knowing what policies they stand for. How many know, for example, that Lincoln Chafee has fully backed CAFTA (free trade with Central America) and permanent trade relations with China, and voted for the credit-card industry-backed bill to restrict personal bankruptcies in 2005? How many know that Governor Carcieri has repeatedly passed up an easy opportunity to lower pension costs for all the cities and towns in the state?

But there is one place on the ballot where we have to learn about the issues, since the issue is the only thing there. Here is our list of the statewide referenda you'll see in the voting booth this November.


Question 1 will permit the Narragansett Indian tribe to build a casino in West Warwick with their "chosen partner," Harrah's Entertainment, in this case. Harrah's is planning to pour about a billion dollars into building this project, so the construction will certainly provide jobs. And the casino itself will employ people after it's built. But whether this will be enough to outweigh the negative impact on Lincoln Park and Newport Grand is quite unclear. Even more unclear will be the state's share of the proceeds. The state takes 60% of the slot revenue in those places. Harrah's offered 25% once, but there's nothing written down.

The whole selling point of the casino to the House leaders who put this on the ballot is its impact on state and town finances. But these "details" are completely absent from any public document. Harrah's has offered its number, but it's not written into the referendum. And once the casino is approved by voters, the power in the negotiation slips right over to Harrah's. We are inviting an 800-pound gorilla to share our little state with us, and only hoping that he doesn't stain the carpet.

Right to Vote

Question 2 would restore the right to vote to people who aren't in jail, but are still on probation or serving a suspended sentence after a felony conviction. Rhode Island is the only state in New England that prevents these people from voting. Probation and parole are supposed to be ways to ease the former criminal back into society. The way we do it, though, it's just a continuation of the sentence. It's fine to think that someone's sentence should be longer, but the fact remains that these are people who are out in the world, living and trying to work among us. One would think it important to make it easy for them to succeed.

Capital Budget "Reform"

Question 3 is a technical change to the constitution changing some aspects of the state budget. Right now, each year, the state budgets only 98% of the revenue we think we'll receive. The remainder gets put into a "rainy day fund" which is used to carry us over short term cash-flow problems. The fund itself is capped at 3% of revenue, so when it's full, whatever is left over is the "Capital Plan" and is to be spent on capital projects like parking lots, and repointing bricks in state buildings.

The problem is that one of the ways that the state budget has been balanced in the past few years is by calling repayment of state bonds a capital project, and moving it into the Capital Plan. So this year, we'll spend about $25 million on capital projects and about $39 million on repaying bonds out of this fund. This is not the way the Capital Plan/rainy day fund was planned, and the people who planned it are upset about that and want it restored to its original purpose. If I were planning a new state from scratch, this is how I would design a budget process. But I'm not, and reality forces me to admit that this is how the state has been balancing its budget for several years. Approving this measure will mean a $30 million hole in next year's budget in the name of fiscal fitness, but that money will be spent on maintaining state buildings instead. Maintaining our buildings is important, but our Governor views the budget as a zero-sum game. No new expense is worth paying for, in his opinion, so the extra costs will certainly displace something else. If you were concerned about cuts in state spending last spring, you should be very concerned about passage of this measure.

The measure also increases the size of the rainy day fund, from 3% of the general revenue to 5%. But this change is phased in over a few years, so it won't be a very dramatic change at all.

Higher Ed Bonds

Question 4 is a $73 million bond for one high-profile project, and one smaller, but probably necessary one. The high-profile project is a new College of Pharmacy building at the University of Rhode Island in Kingston. The lower-profile project is a renovation of some buildings at Rhode Island College.

High-profile projects like the College of Pharmacy are the way universities attract students as well as funding. In other words, this is potentially an investment with a payoff. The pharmacy program is a good one, and has grown out of its current home. But the likelihood of the investment paying off in the long run is also dependent on whether the state chooses to support the university or (as is currently the case) not. State support of our colleges has been on a 15-year slide, though the state is always ready to borrow for fancy buildings to appear supportive. Our colleges are now essentially private institutions with a little bit of state funding. In 1990, the state contributed a bit less than $70 million to URI, and tuitions made up a bit more than $40 million. In 2007, the state's contribution will be $86 million: up 23%. But the tuition contribution is up well past $100 million: up 150%.

Transportation Bonds

Every two years, voters are asked to approve another round of borrowing for RIDOT. What voters here may not realize is that what seems like a routine operation here is very unusual among states. We are among the only states in the country who borrow year after year to fund our road construction. Most states borrow for unusual expenses, like big bridges or toll roads, but we borrow for \emph{everything}, and every year the debt service we pay goes up by $3-4 million. It's the very definition of an irresponsible budget practice and the same people who insist on the "prudence" of a reform like question 3 see nothing wrong with this routine borrowing.

Had Lincoln Almond stopped this practice a decade ago, we would now have about $300 million less state debt. The interest on that debt is roughly equal to what DOT is proposing to borrow in this bond measure. In other words, we're now borrowing to cover debt service payments. Using a credit card to pay your credit card bills is a common financial strategy, but not a good one. DOT is in a deep fiscal hole. Vote yes on number 5 to make it deeper. There's much more about DOT's fiscal woes in RIPR issue 7, available here.

The transportation bond is lumped with a bond to buy new bus equipment and transit improvements. It's $80 million for highways and $7 million for commuter rail stations in Warwick and Wickford and $1.5 million for new buses. These kinds of transit improvements are always lumped with DOT bonds, to help them pass. The strategy is a disgrace, since people who think the state needs more transit are forced to vote for more highways. There's nothing essential about doing it this way. The Department of Environmental Management does the opposite, and has three bond issues at stake.

DEM Bonds

Bond question 6 ($11 million) will fund the rebuilding of big parts of the Roger Williams Park Zoo, number 7 ($4 million) will rebuild part of Fort Adams and provide some improvements around that park, and number 8 ($3 million) is for helping towns build soccer fields and playgrounds. All of these are general obligation bonds, which means they will be repaid by state tax money, not by zoo or park admissions, or by the towns that receive the help. They are also very modest in size compared to the benefit received.

Affordable Housing

Question 9 is a $50 million bond to build affordable housing. The housing market in the state is in deep crisis, and anything will help, but this bond won't help much. Residential housing is a $5 billion a year market, so this much money isn't going to do much except provide housing to a few lucky families. The truth is that our housing crisis is really a market failure, and the state really has no housing policy besides building a few units, and forcing towns to develop a policy of their own. Until the state decides to address the market conditions directly, we will all suffer.

—Tom Sgouros

[If you thought this article was useful, there are lots more coming. This month's issue also contains a report on disturbing developments in labor law, a description of what's wrong with comparisons between Rhode Island and New Hampshire, and a review of an excellent, but troubling, book about the Iraq War by George McGovern (remember him?) and William Polk. Please subscribe, and help support useful research on RI public policy.]

14:57 - 26 Oct 2006 [/y6/oc]

Tue, 24 Oct 2006

North Kingstown Candidate Questionnaires

For Town Council and School Committee candidates are available here.

Happy reading.

17:22 - 24 Oct 2006 [/y6/oc]

New issue

Almost out. Subscribe here.

  • Review of Out of Iraq by George McGovern and William R. Polk
  • Analysis of Kentucky River NLRB damage by Peter Asen (see below)
  • The referendum questions. What is that question 3 about? And the others.
  • Is it really all peaches and cream and low taxes in New Hampshire? What are we to make of comparisons between RI and our flinty neighbors to the north?
A link to an article cited in the review is here. Did you know that over a million US troops have served in Iraq or Afghanistan since 2001? An interesting number. Now, did you also know that 29% of all the troops who served in the first Gulf War were on permanent medical disability a decade later?

Bilmes-Stiglitz: NBER paper on the true cost of the Iraq war — $2 trillion. See here.

17:22 - 24 Oct 2006 [/y6/oc]

Sat, 14 Oct 2006

Quakers a threat to National Security

According to internal documents from the Defense Department (see NY Times story), they have been collecting and keeping information on anti-war protests and protestors.

The documents, obtained by the American Civil Liberties Union under a Freedom of Information Act lawsuit, show, for instance, that military officials labeled as "potential terrorist activity" events like a "Stop the War Now" rally in Akron, Ohio, in March 2005.

The Defense Department acknowledged last year that its analysts had maintained records on war protests in an internal database past the 90 days its guidelines allowed, and even after it was determined there was no threat.

11:48 - 14 Oct 2006 [/y6/oc]

Wed, 11 Oct 2006

In case you were wondering

A study came out last year from researchers at Johns Hopkins, and published in the British journal Lancet that tried to estimate the deaths of Iraqis attributable to the war there between March 2003 and September 2004. The number they came up with (100,000) was controversial, but there weren't any rigorous criticisms that seemed to hold water. The methodology seemed sound to me, as well as to the editors of Lancet, among others.

Anyway, the same authors, using the same methodology (statistical sampling based on random surveys) have updated their data to September 2006, and corrected some misattributed surveys from the earlier study. Their new number: 655,000 people have died because of the war, about 601,000 from violence (mostly gunfire), and the others from disease. They further note that the number dying have increased every year, and car bombings have gone up substantially. You can find the report here.

The prospects don't look so happy, do they? Just to give some perspective, 655,000 people is somewhere between 2% and 5% of the population.

14:38 - 11 Oct 2006 [/y6/oc]

Fri, 06 Oct 2006

A little more...

Through the kind efforts of a local businessman, the NK local candidate questionnaire team gets a publicity boost. See here.

Go to whatcheer.net/nksc to find the questionnaire.

09:06 - 06 Oct 2006 [/y6/oc]

Wed, 04 Oct 2006

Did you know you were a supervisor?

The quarter-century assault on labor unions continues today with a decision by the National Labor Relations Board that will have the effect of making hundreds of thousands of workers (minimum) legally ineligible to be represented by a union because they have some management responsibilities among their duties.

This is one more of those acts that seems very limited and technical, but will have vast implications for union organizing around the country: is the head of a high school english department an employee or a manager? How about a shift captain in a fire department? A floor manager in a grocery store? The management of the school, fire department and store don't think of these people as managers, even if they have some responsibility for other employees. But the NLRB now calls them part of management. Too bad for them.

09:16 - 04 Oct 2006 [/y6/oc]

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