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

Tue, 30 May 2006

Late for Memorial Day

But all too appropriate.

14:42 - 30 May 2006 [/y6/my]

Mon, 22 May 2006

Is the Library Really Broke?

From Ellen Schwartz, a Providence CPA:

I am a resident of Washington Park and a volunteer tutor with the after school homework club that used to meet at the Washington Park Branch of the Providence Public Library (PPL). When the library informed the residents that it was closing the branch because of structural damage to the building due to an unrepaired leak in the roof, I could see first hand the terrible effect it would have on the neighborhood. I am also a Certified Public Accountant so I decided to take a look at their financial statements to see why they had been too broke to fix the roof.

All non-profit organizations have to file an informational tax return called Form 990 with the Internal Revenue Service. All of the information in this article is from tax forms filed by the PPL, which are open to public inspection, and which are available on the Internet at www.fndcenter.org.

For the most recent year posted, June 30, 2004, the PPL had an excess of revenue over expenses (called profit in the business world) of over $2.6 million. For an institution with an annual budget of around $10 million, this is not an indication of financial crisis-quite the contrary. But since a single year could be misleading, I also looked at the tax returns for the two previous years. Those two years also showed "profits" of $710,000 and $459,000. But the PPL claims there is a crisis so I decided to look further.

Profit is only one measure of an agency's financial health. I also looked at the Balance Sheet of the PPL. The Balance Sheet shows what an organization owns (such as cash, investments, buildings, computers, books) and what is owes (unpaid bills and loans). The difference is called net assets for non-profits, retained earnings for corporations, and net worth for individuals. The library had net assets totaling $57 million.

The tax return indicates that PPL has investments totaling $34 million dollars. Around $14 million of this amount is the library's endowment. Endowments are restricted by donors so that only the earnings can be spent. This restriction has the force of law. In addition, RI state law requires that a percentage of earning be retained to cover inflation-a sort of "cost of living" adjustment for endowments.

The additional $20 million is unspent income from previous years and constitutes the library's savings. As such, it could be used for any purpose including fixing the leaking roof at the Washington Park Branch. Unfortunately, the Board of Directors has decided to designate this money to be used as if it were an endowment--that is, they decided to spend some of the investment earnings but not the funds themselves. This decision has no legal force; the Board can change this decision and use these funds at any time. The Board has stated that not spending this $20 million in savings is necessary to ensure the future of the library.

I am a great believer in fiscal responsibility. I think saving money for the future is a great idea. But they are times when you have to dig into your savings account-if your kids are sick, or your roof is leaking, or you're thinking of closing two thirds of your branches. The PPL could make all the needed repairs to all the branches without using their endowment and still have savings.

The financial statements indicate that the library was in sound financial health when the Board decided to forgo needed repairs and close the Washington Park Branch. Now they're threatening to close almost two thirds of the branch libraries. What do their budgets say about their future financial health?

The PPL administration is claiming that it will have a $900,000 deficit in its June 30, 2007 budget. When I looked at this budget I was surprised to see that projected income was around $8.5 million for the years ending June 30, 2006 and 2007. The average income for the last five years was $10.5 million. What happened to the other two million? City funding has remained steady and State funding has increased. I then realized that the budget shows no income from the annual fundraising campaign. Where was all the fundraising income?

The answer is complicated. In August the PPL incorporated a new non-profit organization called the Providence Public Library Foundation. One reason for doing this is that the foundation will not be required to comply with the Open Meeting laws. All annual campaign donations will go through this foundation and the Board of Directors of the foundation, not the library Board, will decide (in secret meetings) how much of the library's money to forward to the library. The only way to find out how much money was donated to the foundation is to wait until their tax return is filed. By setting up the foundation the library manages to hide millions of dollars of their money from public scrutiny and make themselves look much poorer than they are.

I love libraries. I think that libraries should be making it easier, not harder, for people to read books. It makes me very sad to request that the City withhold funds from the library until an investigation is completed into PPL and a commitment is made by the library to follow its Mission Statement and support the branch libraries in our community. At the very least, the City has to right to insist that the funds that it gives to the library be used to save the branch libraries in our poorest neighborhoods.

15:49 - 22 May 2006 [/y6/my]

And a pony

Read here.

15:48 - 22 May 2006 [/y6/my]

Tue, 16 May 2006

New issue out

With the usual apologies for tardiness:

  • Who pays the property tax? A distributional analysis of 39 cities and towns.
  • Dissecting another statistic: are our wealthy people really less well off than in 1995? Could RIEDC really be correct about this? (Hint: no)
  • Nick Tsiongas: What's really the matter with health care in RI? Is insuring the uninsured really the best way to fix it?

Didn't you mean to subscribe already?

Also, see here for the table that wouldn't fit in the new issue.

11:20 - 16 May 2006 [/y6/my]

Sat, 13 May 2006

RIPR breaks into 20th-century media!

You can hear our views on taxation and Rhode Island's tax "system" this month on Laborvision, a cable show produced by the Institute on Labor Studies. The discussion was held with Marcia Reback of the RI Federation of Teachers and Health Professionals, and Marti Rosenberg, director of Ocean State Action.

The show appears on Cox Channel 14, at these times:

Tues,May 23,7-8 pm
Thurs,May 25,8-9 pm
Sat,May 27,5-6 pm
Tues,May 30,7-8 pm
Thurs,June 1,8-9 pm
Sat,June 3,5-6 pm

15:12 - 13 May 2006 [/y6/my]

Quintiles of household income

A table that wouldn't fit in the new issue of the newsletter:

Quintiles of household income (estimated from 2000 census, inflated to 2004, using BLS wage inflation)
Central Falls7,71016,00226,77443,04981,347
East Greenwich18,00248,79581,933129,788370,220
East Providence12,71229,69846,20364,964129,508
Little Compton18,70944,70365,13299,869316,105
New Shoreham12,24629,81651,01680,554209,197
North Kingstown17,34343,47666,341102,360247,035
North Providence12,96729,99945,68665,186138,314
North Smithfield15,96040,89667,16190,323185,158
South Kingstown18,63843,38666,20090,323193,784
West Greenwich12,53929,90545,73464,788124,603
West Warwick15,68834,99653,36181,438208,671

14:40 - 13 May 2006 [/y6/my]

Wed, 03 May 2006

Tax cuts again

The House is poised today to vote on cutting the income taxes of the richest people in Rhode Island. Since the state budget is in serious deficit, this will guarantee that the rest of us make up the difference.

Supporters of the bill can't cite any evidence that rich people will move here because of this bill, or any evidence that our economy will improve even if they do. They can only rely on appeals to "common sense."

Well common sense tells me that decaying schools and high property taxes also cause rich people to move, and that giving rich people another tax cut on top of what they have already received won't help that one little bit. Not only that, bad schools cause poor people to be denied a decent education and high property taxes cause people all over the state to be turned out of their homes. But the members of House Finance are clearly hypnotized by the siren song of supply-side economics, a theory of economics built on other theories of economics, and without any real support from what they call, you know, the real world. Out here in that world, we find the House leadership's support of this bill disgraceful.

Someday, one hopes these people will find their past support for this measure embarrassing. In the no doubt vain hope of hastening that day, here is a list of the members of House Finance. Contact information for them can be found here.

  • Representative Kenneth Carter
  • Representative Arthur J. Corvese
  • Representative Steven M. Costantino (Chair)
  • Representative Paul W. Crowley
  • Representative Elizabeth M. Dennigan
  • Representative Raymond E. Gallison Jr.
  • Representative Robert B. Jacquard
  • Representative Peter L. Lewiss
  • Representative Jan Malik
  • Representative Victor G. Moffitt
  • Representative Carol A. Mumford
  • Representative Eileen S. Naughton
  • Representative Henry C. Rose
  • Representative William San Bento Jr.
  • Representative John A. Savage
  • Representative Joseph H. Scott
  • Representative John P. Shanley Jr.
  • Representative Thomas C. Slater
  • Representative Anastasia Williams

07:36 - 03 May 2006 [/y6/my]

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