Rhode Island Policy Reporter

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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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Wed, 26 May 2010

Central Falls: Solving the Wrong Problem

Central Falls is broke, we read. Last week, the city council voted 4-1 to take the city into receivership. And now the commentary sweepstakes begin, with every editorialist and analyst rushing to offer their opinion. I guess I'm among them, but let me start by offering a little ridicule of my peers.

I read one "analysis" that said that Central Falls was too small to be independent, and it should join with Lincoln, Cumberland, or Pawtucket. This is your typical 30-second analysis: superficially plausible, but fundamentally ridiculous. With analysis like this, we'll all be broke soon. Central Falls is in a bind because their property tax revenue can't pay their expenses. Why should any other town want to accept that burden? None of its neighboring towns are exactly pillars of financial strength. Were Pawtucket to annex Central Falls, what would be the result except to bring Pawtucket a step closer to its own fiscal armageddon?

Perhaps it's interesting to ask how they got in this bind? Why, after all, is Central Falls so small? Who was it who thought such a small city was viable? Well, maybe it was all the rich people who used to live there.

Central Falls was a wealthy community of manufacturers and their employees when the larger town of Smithfield broke up in the 19th century, leaving it as the smallest piece. There was no question of its viability then; there was plenty of money to go around. Even as late as 1950, measured by amount of taxable property per student in its schools, Central Falls was one of the richest towns in the state, behind only Providence, Pawtucket and Woonsocket, and there was a considerable gap between them and fifth-place Newport. (Narragansett was actually first, but that's only because they had so few students, so I ignore them here.)

So what happened? The biggest demographic shift in our state and our nation's history, that's what. In the second half of the 20th century, our nation perfected suburbs, and the highways and cars that made them possible. In 1950, it was thought stupid to expect to live in East Greenwich and work in Providence; the country was for hicks. By 1970, that was no longer true. By 1990, the reverse was true for many. This is the very definition of an epochal shift. During those years, hundreds of thousands of people moved from our urban centers to what had been the countryside. Rich neighborhoods like Central Falls or Elmwood in Providence became desperately poor ones, while poor places like East Greenwich became quite rich. Central Falls became the poorest municipality in the state, followed by Woonsocket, Providence, Burrillville, and Pawtucket.

I have no idea, really, if there was mismanagement and corruption in Central Falls. (And let's be honest, the same is true of virtually everyone who claims certainty on the subject.) The evidence I do know about suggests there was some of each -- and I dearly hope that each is rewarded justly -- but at worst this only hastened the crisis rather than causing it. Central Falls is far poorer in taxable property per citizen than even Woonsocket, the next poorest municipality in the state. Even so, they have to satisfy the same code requirements on their buildings, the same water standards for their citizens, the same readiness requirements for their emergency services and all the rest of what we demand of our cities and towns.

What caused this crisis? There are three primary factors. First, property values declined as wealthy people sold in order to move out of town. Second, less wealthy people moving in to take advantage of those new housing bargains tended to require more services. Third, state legislators and governors refused to support Central Falls or any of the other municipalities in this bind, preferring to blame them for it, while imagining that the same rules that apply to a fast-growing East Greenwich can be used to judge a shrinking Providence.

Adding insult to injury, over the past half-century the state has actually subsidized the growth of the suburbs and the flight from the cities. Highway funds are but one example. Route 2, the backbone of commercial sprawl in Cranston and Warwick, was built and is maintained with state highway dollars, but only up to the Providence line. In town, Route 2 is the city's responsibility. In addition, school construction funds and dozens of hidden subsidies help keep the cost of suburban living down, at the expense of our cities.

Here's the important part: the state overall didn't lose taxpayers during the decades after 1950. On the contrary, our taxpaying population and the taxes we collect went way up. What state government lost was the will to ask its citizens to support the cities even while it encouraged the flight to the suburbs.

The crisis in Central Falls is nothing more than the logical and predictable outcome of a set of policies that devastated our cities while creating the suburban sprawl most of us now live in. Mayor Charles Moreau and his receiver stand ready to use the receivership process to gut their labor contracts and punt on their bonds, but it will be in vain. The forces that created their crisis are still at work. If they can lower the cost of government in Central Falls, they will only put off the day of reckoning by another few years.

We will not see a solution to the crisis affecting Central Falls -- but also all the other cities and towns in the state -- until we admit that we are in the middle of a municipal funding crisis decades in the making. We have set up incentives and a tax structure that make sensible management of our cities virtually impossible. That's the real crisis in Central Falls.

15:39 - 26 May 2010 [/y10/cols]

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