Non-Public Employees in New York's Public Pension System

From an interesting blog called Pension Risk Matters:

Attorney General Andrew Cuomo is investigating "alleged abuses of the state pension fund" at school district, town and village levels. External contractors may be costing Empire State taxpayers a bundle in the form of "undeserved" retirement benefits. (See "Cuomo expanding pension probe," April 14, 2008.)

The TimesUnion blog, that second link, elaborates.

Attorney General Andrew Cuomo on Tuesday is expected to announce that he is further broadening his probe into alleged abuses of the state pension fund to include not just school districts, but towns and villages as well.

Cuomo was already looking into the practice by some school districts of putting outside contractors, particularly lawyers, into the state retirement system. The practice has allowed some attorneys to rack up huge amounts of retirement credits — possibly illegally, Cuomo says, because they didn’t qualify as employees.

The attorney general is now turning his attention to a similar practice in local governments, especially the smaller ones, which also don’t always have staff attorneys but hire them under contract.

One of the lawyers who benefited from that system, James Roemer, accrued a taxpayer-funded pension worth more than $80,000 a year working for various cities, towns, counties and villages, in addition to being in private practice. Roemer, according to a person familiar with Cuomo’s investigation, has been subpoenaed in the probe.

By gum, Rhode Island may have the second highest unfunded public pension liability in the country. But we don't have non-public workers in any of our public pension systems.

(... Do we?)

Taking from the Not So Rich

So proud of this little snippet from a Providence Business News piece is Patrick Crowley that he's mentioned it multiple times:

But what about the rest of us? After all, nearly 50% (48.7%) of the returns filed were for incomes BELOW $30,000 a year. And while this group pays 4% of the state’s income tax they actually earn only 3% of the income in the market. The $100,000-$200,000 group earns 24% of the wages but only pay 23% of the income taxes, and the $75,000-$100,000 group earns earn 14% of the wages but only pay 12% of the income taxes. This takes the “progressiveness” out of the “progressive” income tax. And because the other taxes people pay are “regressive” (property tax, sales taxes, etc) the picture becomes more clear – people at the bottom end of the income scale, not the top, are paying more than their fair share.

That's all one needs in order to conclude that it isn't worth the time or effort to pay for the article or the periodical in which it appears. It might be enough, for some, to observe that Crowley is not satisfied that just over half of all taxpaying households are paying 96% of the taxes, but so thick are the deceptions (or incomprehensions) embedded in his little paragraph that one can hardly stop there.

Although the numbers don't correspond precisely with the latest version online (2006, PDF), he appears to be working from the Rhode Island Division of Taxation's Statistics of Income Report on resident income taxes. If that's the case, then he's already skewed the data considerably for the claims that he's making, because he appears to be using the "RI taxable income" data for his percentages — the problem being that much of the progressivity for which he pines has already been figured into the numbers by that point. The picture changes considerably if one looks at AGI:

	Under $30,000	$30,000 Under $50,000	$50,000 Under $75,000	$75,000 Under $100,000	$100,000 Under $200,000	$200,000 or More
% of total RI taxable income	2.4	11.2	15.0	13.7	24.6	33.3
% of total AGI	10.6	12.5	15.3	13.3	22.4	26.0
% of total RI income tax	4.0	7.9	11.4	11.1	23.7	42.1

The difference between the two are modifications, deductions, and exemptions — in short, those considerations by which the government addresses matters outside of raw income statistics that ought to affect the taxes that they pay. This manipulation becomes all the more notable when one considers the numbers on a per-tax-return basis and adds tax data:

	Under $30,000	$30,000 Under $50,000	$50,000 Under $75,000	$75,000 Under $100,000	$100,000 Under $200,000	$200,000 or More
RI taxable income per return	1,860	23,401	40,185	59,433	96,854	472,615
AGI per return	12,393	39,127	61,609	86,450	131,809	551,011
Income tax per return	172	913	1,691	2,670	5,165	33,088
Tax % of RI taxable income	9.27	3.9	4.21	4.49	5.33	7.00
Tax % of AGI	1.39	2.33	2.75	3.09	3.92	6.00

The probability is that the likes of Crowley would look at the numbers and still decry the inequity across classes, and with that protestation we slip into more philosophical realms... except, of course, for a final adjustment of the picture to account for the distribution of those tax returns that were filed jointly by couples:

	Under $30,000	$30,000 Under $50,000	$50,000 Under $75,000	$75,000 Under $100,000	$100,000 Under $200,000	$200,000 or More
% of returns jointly filed	11.5	28.8	55.5	78.5	86.8	85.7
RI taxable income per person	1,669	18,173	25,838	33,296	51,837	254,529
AGI per person	11,115	30,386	39,614	48,431	70,551	296,750
Tax per person	155	709	1,088	1,496	2,764	17,820

In short, when one accounts for different rates of joint returns, the average AGI in the lowest group decreases 10%, while the vilified $75,000-$100,000 and $100,000-$200,000 groups show decreases of 44% and 46%, respectively. Crowley distorts his data, that is, to the detriment most especially of working and middle class families. It would be fair to ponder for whose benefit he labors.

Little wonder socialists can't make the world work the way they want it to.

ADDENDUM:

Rushing to post this earlier, in order to get to my husbandly duties in the yard, I had a persistent feeling that there was one final "and so" that I wasn't noting. Fresh air and dirty hands having cleared my head, I realize that it was the ratios of each group in each category — holding individuals in the Under $30,000 group to 1 and seeing how individuals in each other group compare by that measure:

	Under $30,000	$30,000 Under $50,000	$50,000 Under $75,000	$75,000 Under $100,000	$100,000 Under $200,000	$200,000 or More
Individual RI taxable income ratio to lowest	1	10.9	15.5	20.0	31.1	152.5
Individual AGI ratio to lowest group	1	2.7	3.6	4.4	6.3	26.7
Individual tax ratio to lowest group	1	4.6	7.0	9.7	17.9	115.2

And so... taking into account jointly filed returns (the appropriate methodology for which is certainly up for discussion), and sticking with AGI numbers, there simply can be no doubt that our tax structure is disgracefully progressive, in the way in which Crowley desires.

Happy Mother's Day!

Happy Mother's Day to all the Moms out there! Thanks for all you do.

Each corner of the world is made a better place when there is a loving mother there. We always need more loving mothers, too.

A special Happy Mother's Day to my Mom out in California, where she is still going strong at 80. An active docent and always on the go, driving her '69 Chevy classic car around town. For all those times of love, encouragement and support - extending from my childhood to more recent times - I thank her from the bottom of my heart.

ADDENDUM:

With a H/T to Instapundit, here is a touching Mother's Day tribute from Rachel Lewis to her Mom. I was particuarly struck by her poignant reflection on what good parents do when raising their children:

...It wasn’t all perfect; but that’s what makes us normal. My parents went to a church none of us kids particularly cared for very much and that caused a lot of conflict in later years. But do you know what? I’m glad for it. I’ve always thought that if everything had been done exactly as I wanted when I was growing up, I’d be a real a**h*l* by now, out in the real world where almost NOTHING is how you want it. And the thing is, at some point you have to ask yourself if whatever your parents did that you didn’t like was done out of their true, sincere belief that it was the right thing to do. I asked myself that question and the answer was yes...

Every parent knows that it is natural for all children to want things done exactly as they desire it. But what appears to have changed in too much of our society today is the notion that Moms and Dads should accommodate these immature demands of children, thereby negating the teaching of an important life lesson described by Ms. Lewis. Failing to teach that lesson does children absolutely no favors, yielding only the unfortunate long-term side effect of making it harder for children to adapt when they leave the nest and discover, to their utter amazement, that the real world doesn't operate according to their whims.

So a special added thanks to the Moms (and Dads) who understand this "old" lesson of parental leadership and do their best to prepare their children for the responsibilities that go with living independently as an adult.

Obama Believes in Recycling

... old political scandals.

Senator Barack Obama said today that a scandal from Senator John McCain’s past – the Keating Five – was just as relevant to the presidential campaign as questions about who Mr. Obama has associated with over the years.

In a news conference here, Mr. Obama was asked whether his campaign intended to raise the banking scandal from the 1980s, which Mr. McCain has apologized for. Every piece of every candidate’s public record, Mr. Obama said, is “germane to the presidency.”

Senator Obama became the presumptive Democrat nominee this week, surpassing Senator Hillary Clinton's regular delegate count and either narrowing or exceeding her superdelegate accumulation. And pollster John Zogby is now predicting that Senator Clinton will drop out of the race even before the remaining primaries are held.

Naturally, Senator Obama is turning to his general election opponent.

"November is a long way away", "a lot can happen between now and then" and "this promises to be a lively campaign". But this is a pretty boring item by which Senator Obama is kicking off his new status.

The Color of Irony Is Crimson

In a leave-no-stone-unturned search for more revenue, the Massachusetts legislature has ordered a study of the implementation of a 2.5% "annual assessment" on college and university endowments which exceed $1 billion. Nine Massachusetts institutions of higher learning would be affected by what would be a first of its kind assessment.

Glenn Beck points out the fabulous reaction of an official of one of the institutions that would fall into that category. Harvard's Associate Vice-President for Government, Community and Public Affairs, Kevin Casey:

You'd be taxing success here.

* * *

Over time this would put us at a real competitive disadvantage which would drastically hurt the Commonwealth.

[Can we get him to address the Rhode Island General Assembly?]

Beck breaks it down.

No, you're kidding me. It's like you're taxing success by taxing people who are making money and who happen to be richer than others? You're taxing success? Boy, Kevin, I never looked at it that way. You might be onto something there. "Over time this would put us at a real competitive disadvantage." No, it would put Harvard at a disadvantage against those who didn't get taxed? No. Who might pay a lower tax? It might put that company at a disadvantage? No, no, Kevin, you're looking at it wrong.

* * *

In the final insult to injury he goes on to say, "And it would hurt the commonwealth. It would hurt the state." How? How? Are you saying because Harvard wouldn't be able to have so much money so they couldn't grow? So they couldn't hire more people? They couldn't bring more people into the state? I never thought of that when I was thinking about taxes and companies. I just thought, oh, they're screwing the state; the bigger they get, the more people they hire, the more people that live here. It's crazy. It's almost like you're talking about the philosophy of, oh, I don't know, Texas. It's almost like you're describing the philosophy of, oh, I don't know, a conservative. It's like you're taxing success. No, Kevin, you're wrong. It's not like we're taxing success. We would be taxing success.

Time Flying, Apology, and Preemptive Explanation

My hour in the the spotlight of Matt Allen's Violent Roundtable tonight was one of the most fun that I've spent in awhile, although I suppose one can only hope that listeners were that engaged. (Streaming audio available here). Really, conversation from commercial break to commercial break felt not unlike a seaplane touching down on the water for a few moments at a time. As the one non-radio guy there, however, I fear that I should take some responsibility in the face of complaints that this edition wasn't sufficiently "violent."

In keeping with my mitigated personality, I'd like to offer a preemptive explanation of something that I said: While discussing gambling in Rhode Island, I joked that the government ought to begin supplementing decreases in the public assistance that people receive with lottery tickets. (Hey, match it dollar for dollar!) Before RI Futurites get out their fire-dance costumes and add this clump of hair to the effigy of my evil opinions, I'd like to clarify that I wasn't promoting a system of giving people in precarious situations an unsecured rope to grab. To the contrary, my intention was to lampoon the practice of using gambling revenue to support the government. Statistically, it's a very regressive form of taxation, and further soaking the poor and working class into further debt with the dubious promise of unlikely riches is tantamount to giving them a turn at the roulette wheel in exchange for money or public investments that might actually improve their lives.

But I could go on. Such roundtables are like rapid-fire brainstorming sessions for more contemplative writing, and the breadth of the topics are evidenced by the conversation that continues during the commercial breaks. For example:

• How the storyline will go if Obama wins the nomination but loses the election. My thought was that there's plenty of time for the American people to forget the primaries and for Democrats to construct the much more comfortable storyline that it was the angry old white man who kept Barack down — not the storied woman. Matt, I believe, took the position that the next few years will see Hillary building on that impulse with a ready-made retrospective "if only" of her candidacy. Jason Martins seemed to believe that Hillary's done after this.
• I got looks from the other panelists when I responded to a caller's question about Israel taking out Iranian nukes by suggesting that the Jewish nation would swing in with a last-ditch strike, that the world would be outraged for a day, but then everybody would go back to business as usual, knowing deep down that Israel had done not only what it needed to do to survive, but the right thing. Everybody else thought the radical Muslims wouldn't possibly tolerate Israeli military strikes inside Iran. My response was that these regimes are centrally concerned with maintaining their own fragile rule and realize that they cannot win an all-stakes battle with the United States and Israel. I'd add, now, that there isn't much amperage that they can add to their anti-Israel hate rhetoric.
• Although we didn't get into it, the whole concept of the state's profiting from gambling is excellent fodder for some ruminations about church and state — to wit, that the state is committing us, via our representatives, to be in the position of profiting from others' misfortunes to so direct a degree that we're expanding the hours during which those people can lose their hard-earned money with the explicit intention of raising more to support our detrimentally large government. A theist might be tempted to suggest that thus do we pull ourselves further into darkness.
• I was going to say that the comic book conversation should have come first, as a warm up, but then again, it did: before we were even on the air, we were discussing the likely plot setting of a forthcoming Captain America movie. I swore I'd read somewhere that rumors are of a Captain America who's part of a U.N. mission of some sort (which was the missing context behind Jason's on-air comment about Captain United Nations), but I can't find the article that gave me that impression.

ADDENDUM:

The audio quality of the above-linked stream has been increased to a more comfortable level.

Facing the Violent Roundtable

Just a reminder that I'll be participating in Matt Allen's Violent Roundtable tonight from 8:00 to 9:00. (I believe those are the times.)

Tune in at 630 AM, 99.7 FM, or online.

The Ultimate Act of Nepotism and Cronyism

The United Nations was forced to temporarily suspend aid shipments to Myanmar because the ruling junta confiscated the intial materiel sent, saying that it preferred to distribute aid "with its own resources".

In order, presumably, to control exactly who receives the badly needed food and supplies. Because of unprecedented and unconscionable foot-dragging by Myanmar's government, only eleven aid planes have landed since the cyclone hit almost a week ago. The U.N. estimates that the death toll could reach 100,000 if assistance is not expedited.

Turning the Nanny State to Your Advantage

Since it looks like the red light cameras are a go again, I wonder if some local entrepreneurial band will take a cue from Britain's The Get Out Clause and turn nanny-statism to their advantage:

Unable to afford a proper camera crew and equipment, The Get Out Clause, an unsigned band from [Manchester, England], decided to make use of the cameras seen all over British streets.

With an estimated 13 million CCTV cameras in Britain, suitable locations were not hard to come by.

They set up their equipment, drum kit and all, in eighty locations around Manchester – including on a bus – and proceeded to play to the cameras.

Afterwards they wrote to the companies or organisations involved and asked for the footage under the Freedom of Information Act.

"We wanted to produce something that looked good and that wasn't too expensive to do," guitarist Tony Churnside told Sky News.

"We hit upon the idea of going into Manchester and setting up in front of cameras we knew would be filming and then requesting that footage under the Freedom Of Information act."

Only a quarter of the organisations contacted fulfilled their obligation to hand over the footage – perhaps predictably, bigger firms were reluctant, while smaller companies were more helpful – but that still provided enough for a video with 20 locations.

"We had a number of different excuses as to why we weren't given the footage, like they didn't have the footage. They delete after a certain amount of time, so if they procrastinate for long enough, they can claim it's been deleted," Mr Churnside said.

Here's a link to the video. As they say, "good on you" boys.

The Anchor Rising Pension Simulation: The Walshian Assumptions

These results are so counter-intuitive, someone needs to double check that I haven't made a mistake, but I think I have all the formulas in the right place. Using NEA-RI Executive Director Robert Walsh's suggested pension analysis parameters, 13.5% of salary contributed to the fund each year, 8.25% investment growth and a 75% benefit after 38 years, plus (for now) an assumption of 3.25% annual salary increases, and a 3.0% COLA after retirement not kicking in until the third year, an employee who retires after 38 years will fund him or herself for a very long time.

The result is very sensitive to the number you assume for growth. With a 7.0% growth figure, the retiree "only" stays self funded for about 26 years. The result is also sensitive to the figure you assume for an annual salary increase, but because (in percentage terms) the big increases in teacher salaries are at the front of a career, when the absolute numbers are relatively small, my initial guess is that the step-system doesn't pose a problem for the retirement of long-career teachers.

But if the 8.25% that Mr. Walsh suggests is realistic, and I haven't made an error in my spreadsheet, it's a truly amazing feat that pols across the nation have managed to screw the public pension system up as badly as they have.

Continue reading "The Anchor Rising Pension Simulation: The Walshian Assumptions"

The Hardest Times... If Only

An odd tangential statement from a Rhode Island Catholic article (not yet online) about the need for young adults and children to be careful online:

"You're at the most difficult period of your life," Quirk began, describing the leap from childhood to adulthood as a "hard" period. "It's challenging to make it through in one piece."

That's District Court Judge Madeline Quirk, presenting with Attorney Laura Pisaturo, and I suppose perhaps for women in such professions, it may in fact have been the case that they've never found hardship beyond the natural transitions of youth. Blue collar workers with multiple children might beg to differ — as would people with debilitating age-related diseases, as would [insert example].

Update on Legistlative Grant "Sunshine" Bill

When both Anchor Rising and RI Future agree on the merits of a piece of legislation, one would think passage through the House would be a no-brainer, no? I haven't seen anyone who doesn't agree with Rep. Nick Gorham's Legislative Grant Sunshine Bill. It would require that all such grants:

...must be included in the annual state budget and must include the following information:
(1) Recipient's name and address;
(2) Name of contact person for the grant recipient;
(3) Name of the legislator who sponsored the grant;
(4) Statement of whether the finance committee of either or both houses of the general assembly have had a hearing on the proposed grant; and
(5) Brief description of the nature and purpose of the grant.

Alas, a look at the current legislative calendar reveals:

House Bill No.7627
BY Gorham, Coaty, Long, Mumford, Trillo
ENTITLED, AN ACT RELATING TO PUBLIC FINANCE -- STATE BUDGET
(provide that all legislative grants awarded by the general assembly must be included in the annual state budget)
{LC639/1}
02/26/2008 Introduced, referred to House Finance
05/06/2008 Scheduled for hearing and/or consideration
05/06/2008 Committee recommended measure be held for further study

Ah yes, the ol' "further study" canard. We all know what that means, huh? Never underestimate the ability of our legislators to stall on good government legislation (how's full implementation of Separation of Powers working out?). Perhaps it would be a good time to remind your legislator that you think this is a good idea.

All I Needed to Know About the Latest Ploy for Same-Sex Marriage, I Learned by Listening to Gordon Fox

Only in the deliberately abstruse logogriph of same-sex marriage advocacy could such a statement be made:

"Divorce can be a more fundamental principle than marriage because it has to do with the due process that's the bedrock of American jurisprudence," Fox said before the hearing. Prohibiting it effectively denies "a fundamental principle of democracy."

Ah, the intellectual contortions that follow a denial of the obvious, which, in this case, means a denial that one cannot be granted a divorce from a marriage that is not marriage. With the smoke and mirrors of "due process" claims, Representative Fox wishes to obscure the reality that a couple must be married in order to end their marriage.

Of course, the goal, here, is redefining marriage, not ensuring procedural democracy... or making sense.

Excuses Over the Border For Raising Taxes

For almost thirty years, lucky Massachusetts has had Proposition Two and a Half.

But it can be overridden by voters on the local level. On Sunday, Boston Herald columnist Howie Carr highlighted some justifications offered to elicit "yes" votes in advance of Brookline's override ballot two days ago.

A snooty editorial writer for a local newspaper instructed the great unwashed as to how little money the Brookline hacks want to extract from workingmen:

“That difference of $110 a year is less than the cost of a Starbucks coffee per week.”

* * *

Barbara Anderson of Citizens for Limited Taxation, the best source for information about these votes, notes a new trend this year: raising the ominous specter of teen crime waves if, say, the high school chess club is eliminated.

“The kids may get lost and turn to destructive behavior,” wrote a woman from Ashland. “The crime threat to all citizens will increase.”

And my favorite, a euphemistic update of an oldie but a goodie:

The hacks used to say they needed to pick your pockets “for the children.” That’s become a cliche, although in Beverly they’ve tried to work around it. The override is no longer for the children, it’s for “our youngest citizens.”

While Brookline's override passed, Chip Faulkner, Associate Director of Citizens for Limited Taxation indicated this afternoon that most Prop Two and a Half override ballots have failed. He cited as the cause voter anger over ever increasing taxes and over the generosity of public sector benefits.

The beauty of Prop Two and a Half is that permission for a property tax increase over 2.5% must be obtained from those responsible for the bill. Contrast with Rhode Island, where the increase threshold is higher and, worse, authority to cross it does not vest with taxpayers.

Differing Perspectives on America

Historian Dale Light offers an interesting summary of how the candidates and their supporters view the country.

One benefit of this interminable Democrat nomination process is that fundamental issues do get discussed -- no I'm not talking about health care, or foreign policy, or the war, or any of those other transitory things; I'm talking about things that really matter in the long run, such as how the candidates and their supporters see America.

By now it is clear that "Hillary!" and her supporters see America solely in terms of competing interest groups. This is pretty standard for mainstream Democrats, has been ever since the rise of the "broker state" concept in the Roosevelt years. It's a social science vision of the country and in terms of electoral politics it consists of identifying and pandering to a sufficient number of interest groups to accumulate a majority.

Tonight in his North Carolina victory speech, "O-ba-ma!" went out of his way to disparage that sociological approach to America, emphasizing instead common approaches to common problems. This is at first glance similar to the unifying nationalistic themes on which Republican candidates have run ever since the party's inception in the middle of the nineteenth century. But there is a significant difference. Republicans love the country for what it is and what it has been as much as for what it might be in the future. Obama, with his strong liberal and radical associations, focuses almost exclusively on negative aspects of the American experience, and talks instead about an ideal America that has never been, but which he promises to bring into existence.

I think he's being a little too rosy with his description of Republicans, but his point is that, all in all, Republicans are more apt to view the country as a whole--the history, the institutions, the traditions--as being a net positive. (I include conservatives with this group, but they also view government as being naturally, and detrimentally, expansionistic. As the last few years have shown, not all Republicans believe this, too). I also understand Light's point about the Clintonian factionalism, but we also have a long tradition of that in our politics, despite the express desires of the founders. Finally, Obama truly is a Progressive with a belief that a group of experts--with Obama in charge--can lead our nation to a virtual (or, to some apparently, a very real) Heaven on Earth. We just have to trust him.

In Case You Missed It

Those who were unable to catch my chat with Matt Allen about kids today can listen to the four-minute segment by clicking here (or download).

We'll be doing this every Wednesday; tune in at 6:50 p.m. next week for Andrew's at bat.

In the interim, by the way, I'll be participating in Matt's Violent Roundtable discussion this Friday night from eight to nine. (He clarifies the meaning of the name in the comment section of this post.) I heard it last week, and it's sure to be a must-listen hour of radio to cap each workweek.

When Violence Is TV

It would seem that the manifest circle whereby violence on TV produces violence in life is complete:

An afterschool fight that drew 50 to 60 student onlookers in front of Roger Williams Middle School was posted on the Web site YouTube, making Providence part of a growing phenomena in which teenagers use technology to publicize acts of violence.

When the police arrived Wednesday around 3 p.m., they saw three to five girls punching and kicking someone in front of a large crowd of students from Roger Williams as well as a nearby high school, Cooley Health & Science Technology Academy on Thurbers Avenue. ...

"Kids live in cyberspace where popularity is based on page views," she said yesterday. "We're creating a generation of kids who live in virtuality, not reality. They see themselves as the producers of their own hit shows."

The act of videotaping allows teenagers to distance themselves from violence, turning them into passive observers rather than participants who feel the victim's pain, she said.

It's long been my sense that adults underestimated the risk of steeping children in advanced technology. As I've said before, for my generation, by the time we'd gotten to Mortal Kombat, we'd logged hours on games that were clearly games, whether Super Mario Brothers or Pong. Now, not only can kids control a virtual beating, they can become the producers of reality TV violence. It's wonderful to be able to actively produce things — videos, music, and so on — that once required corporate resources, but there were mollifying restrictions that came with accessing those resources.

Digging a Deeper Hole

See, here's the sort of proposal that illustrates that our legislators truly do not understand and/or are unwilling to address the structural problems that plague Rhode Island:

After a lengthy debate, the House put off a vote on a bill sponsored by Majority Leader Gordon D. Fox, D-Providence, that would require all state public works projects with price tags of $100,000 or more to be performed by contractors who pay apprentices in an on-the-job training program.

Supporters including House Labor Committee Chairman Arthur J. Corvese, D-North Providence, said the bill ensures that the construction industry prepares a future generation of laborers to replace what is now an aging work force.

But Republicans slammed the legislation as excluding smaller contractors and wasting money in a year when the state is struggling to cut costs.

House Minority Whip Nicholas Gorham, R-Coventry, said lawmakers need only look to a strongly worded letter from the state’s Division of Purchases to get a whiff of the proposal's flaws:

"By requiring contractors to have apprentice programs in order to bid, the bill essentially knocks [small contractors] out of the bidding process which favors larger contractors that have apprentice programs already in place," the state’s acting purchasing agent Lorraine A. Hynes wrote in a March 25 letter to Corvese. "Further, by decreasing the number of bidders, the bill will drive up the cost of State contracts which will hurt Rhode Island taxpayers.

"At a time when the State is facing large budget deficits, it is unwise to consider measures that potentially increase costs," she wrote.

The General Assembly ought to be stripping these regulations from the law, not adding them to it.

Cranston School Committee Approves a Caruolo Action

From today's Providence Journal:

The School Committee voted late Tuesday night to sue the city for $4.9 million in additional education aid, setting the stage for a costly, bruising legal battle.

The committee became the second in the state this year, after the West Warwick board, to authorize a lawsuit seeking more cash from a local municipality in what is known as a Caruolo action.

* * *

Talk of a Caruolo action has been swirling since the beginning of the fiscal year, when school officials said they could not run the schools with the $125.3 million they got from federal, state and local sources.

The school district has maintained, for months, that it would need something on the order of $4 million more from the city to meet its obligations.

But city officials have long speculated that the school district would be willing to settle for something closer to $2 million in the end.

That speculation, it now seems, was faulty.

Is it too obvious to point out that this could have been avoided if the School Committee had structured budgets and executed contracts that were within the means of the city?

Rhode Island Persuades My Skeptics

Well, it took some time, but apparently, Roland Benjamin's been persuaded:

The info on shrinking tax receipts was predictable given Justin's demographic research here.

Because we have replaced around 29,000 people from above 3x FPL (about $60k in household income) with 25,000 below that threshold, the tax receipts should follow that. And they did.

Above $60k in earnings, a household is likely to be paying more in taxes than they are consuming in public services. The inverse will also be true.

My only skepticism with the original research was that tax receipts had not reflected the trend. Today's front page of the Projo removes any doubt.

"Holding the line" on taxes, when we are clearly chasing taxpayers out will simply preserve this outbound trend.

What the other side (which, to be clear, by no stretch includes Roland) has been desperately hoping to ignore is that these trends have a natural lag. The suggestion of the stunning income outmigration on the charts to which Roland links is that the exodus began in earnest in 2005. That's income reported on tax returns filed in 2006, some of it no doubt from people who continued to work in Rhode Island, thus making them liable for RI taxes, with some of the government revenue (as I've theorized) temporarily boosted by taxes on the activities entailed in packing up and moving.

I'm keeping my eye out for Census and IRS data for 2007, and although I'd be thrilled to find my prediction wrong, I fully expect to see the upper-income categories that have thus far held steady turning south. Once that happens, it's start-a-fire-or-lights-out time.

The Anchor Rising Pension Simulation

James Cournoyer's observation, made in his May 5 Projo letter-to-the-editor, that contributions from employees into the Rhode Island public pension system don't come anywhere near to covering the amount that the system is obligated to pay out, shouldn't take anyone by surprise. Pensions (and defined contribution plans, for that matter) work on the principle that contributions + investment growth = mo' money, given time. The investment component cannot be neglected in any attempt to determine reasonable payouts.

The basic assumptions that go into building a pension fund are that...

1. Every year, an employer and employee will put some percentage of an employee's salary into a "kitty" of eventual retirement funds.

   (I can have a bit of an argument with multiple sides in the pension reform debate here. Especially when participation in a pension plan is mandatory, I don't see much point, from a fiscal perspective, in separating the "employer" contribution from the "employee" contribution.)

2. As the employee's salary grows each year, so do the contributions to the kitty.
3. The total in the kitty also grows (hopefully) through investment.

To get a sense of what the numbers are, we can start with the assumptions in Mr. Cournoyer's letter, an initial salary of $30,000 and annual raises of 3.25%. We'll also need to assume a figure for total employer-plus-employee contributions to the pension fund (I'll use 20%, for starters), and an annual investment growth rate, (I'll use 7%, relative to what's already in the kitty from the previous year plus one-half of the current year's contribution).

Under those conditions, after 20 years, Mr. Cournoyer's hypothetical employee will begin with about $287,000 to draw on for his or her retirement...

Now, our hypothetical retiree begins drawing out of the pension fund at age 45 after 20 years of contributions. According to Mr. Cournoyer, the rules are that…

1. The initial pension amount taken is 50% of the average of the highest (in this example, the last) five years of salary.
2. There is a 3.0% cost-of-living adjustment on the size of the annual withdrawals.

But also, there's a third rule we need to add -- a rule, I suspect, often forgotten in initial perceptions of how pensions work -- that growth (hopefully) continues in the kitty throughout the retirement drawdown period. In particular, we'll assume the same 7.0% growth used in the building phase continues, in this case calculated relative to last year's kitty minus one-half of the current year's withdrawal amount. The quantity to be concerned about is not when the money-out equals employee-contributions-in, but when the total in the kitty, contributions plus investment growth minus distributions, falls below zero. At that point, our hypothetical employee's retirement is no longer self-funded and additional money must be found to directly cover the pension cost. (There are two basic sources of this additional money. One, of course, is tax revenue sent directly to pensioners. The other is money already in the fund from people who die before they collect everything their contributions + growth would pay for. Sometimes I think that actuarial science, rather than economics in general, should be called "the dismal science").

Anyway, here's what happens to the fund based on Mr. Cournoyer's assumptions ...

I used Mr. Cournoyer's numbers, not because they are necessarily realistic (for state employees and teachers, for instance, I don't think that 50% pensions for 20 years of service are possible, and under some recent reforms, the COLA increase may not be so aggressive), but because they simultaneously illustrate...

1. That with solid investing, it is reasonable for a pensioner to expect to get many multiples of his or her contributions back, but also...
2. That many multiples may not be enough to cover the cost of an early retirement. Given that the average lifespan in the U.S. is around 75 years, a pensioner in the system above would require direct funding from some other source to pay for his or her retirement for about 15 years.

So, before going on and trying to figure out what is or isn't working in the pension system, are we anywhere close to having a method we can agree upon for analyzing it? (Also, I can tinker with the numbers, if people are interested in seeing the results under other conditions).

Surviving the Post-Transition

The current news and politics atmosphere has something of the feel of a transition. We're between the passage of the supplemental and the initial markers presaging the debate over next year's budget. We've seen the parade of interested parties, and we're well aware that discussion has returned to the back room. What's next?

Well, the supplemental budget offered some morsels of hope that the General Assembly is beginning to figure out the problems that the state faces — with cash welfare held more strictly to limits, healthcare provision decreased (notably in the gift to childcare providers), and changes to the public sector's healthcare deal. Some further positive steps are at least receiving a hearing, such as Coventry Republican Rep. Nick Gorham's proposed reforms of the legislative grant system.

What concerns me is that, although some of the restrained spending apparently represents long-term changes of policy, none of the voices with substantial carriage are calling out proposals to fundamentally change the way RI does business. The cuts in expenditures are money-savers — sharing the pain and meeting our financial obligations. They aren't being cast as structural corrections. And that doesn't quite inspire confidence in the direction of the next round in the budgetary arena. We have already heard Senate President Joseph Montalbano declaring that a budget is "really a policy statement," and we can easily imagine legislators' claiming that those dependent upon social services and unionization have "already sacrificed."

"We've already stripped the extra fruit from that tree," one can hear. Thus the powers that be may declare a need to balance the reluctant plucking of low-hanging fruit from those imposing limbs with the unripe blossoms deep among taxpayers' branches. Moreover, cuts to services and benefits — presented as such — are ripe to be renewed with the first signs of an economic spring, whereas their presentation as structural changes would herald an intention to make Rhode Island a better sort of state.

A truly engaged and well-intentioned government would be announcing studies and bills to address the state's dreadful business climate. It would be looking to deregulate the many areas in which Rhode Island makes it more difficult than its neighbors to do business. It would be redirecting its limited funds to improve failing roads and bridges — changing the calculation whereby it makes almost no investments in transportation beyond federal funds and dedicated revenue from the gas tax. It would be taking dramatic steps to change the way our schools operate — not only in seeking proof of student learning, but in channeling more funds to resources and services that help those students to be capable of such proof, rather than to work-to-ruling unionists.

With the revenue gap expected to widen, our state needs nothing so much as a change of attitude. Allowing the oppressive largess merely to slip away as minimally as possible will extend the period of decay, while decisive action will spark confidence. For that to be a possibility, those who've vested their hopes in extracting gifts and promises from the state will have to begin siding with their fellow Rhode Islanders in the push for change. No longer can they back Their Guy — the one who pushes for their special interests — "even though..."

As for the rest of us, our hope must be that everybody involved is taking this moment of transition not as an opportunity to regroup the troops for another assault, but to reflect on the basics of government and economics, to cast their eyes toward long-term goals, rather than short-term exit strategies.

His Speculation is Predicated on a Major Presumption ...

... namely, the quality of his own presidency.

From the Telegraph (UK):

Standing in his cowboy boots on the back of a 1941 Ford pick-up truck in tiny Zebulon (population: 4,329), Bill Clinton bestowed on his wife Hillary what he perhaps considers the ultimate accolade. She would, he stated gallantly, be an even better president than he was.

Rain on Me

We interrupt this broadcast for a moment of hyper-local blegging...

Would anyone with a measure of civil engineering experience care to comment on whether the permanent shower occurring beneath the new overpass between Route 95 exits 18 and 19 is something Rhode Island drivers (or taxpayers) should be concerned about?

We now return you to your regularly scheduled program.

Re: MIA: Voter I.D. and Scrapping of the Straight Party Lever

Secretary of State Ralph Mollis appeared on WHJJ's Helen Glover Show this morning. He attempted to explain why a voter I.D. law that passed a US Supreme Court challenge by six to three cannot be brought to Rhode Island during this legislative session

The only logistic barrier to this law is the absence of a mechanism for the state to provide, free of charge, picture identification to those voters who presently lack it. The Secretary of State has been aware of this requirement for several months and has even suggested that such a requirement could be fulfilled by the DMV. Yet he took no steps in the interim months to facilitate this solution in time for legislative action.

What, then, is the real reason for the delay to this important election reform?

Two Feel-Good Stories

Times are tough, but we shouldn't be blind to the uplifting stories that are out there. Here are a couple.

William Kamkwamba was a 14 year old school dropout from Malawi. He wanted electricity to help his village. So he went to the library, read some books and built a windmill. Here's more (h/t).

As a former jock (who still hasn't admitted that those days are over....), I firmly believe that sports are a mirror of our society. If that is the case, then the story "Touching them All" can give us hope that there are those in the next generation who have learned the importance of character.

RI Revenues Down Again

Steve Peoples of the Projo reports that Rhode Island's economic condition is amongst the region's and the nation's worst...

Economists reported last week that Rhode Island is one of nine states across the country and the only one in New England experiencing an economic recession. State Tax Administrator David M. Sullivan supplied data yesterday detailing the effect of widespread job losses, stagnant wages and weak consumer confidence.

Sales tax collections are down $23 million, or 3.1 percent, compared with the same period last year, Sullivan reported, while income tax revenue is down $9 million, or 1 percent. Should the trend continue through the end of the fiscal year in June, as expected, it would be the first time that the state’s largest two revenue sources collectively fell since the early 1990s.

Doing a Job on the State

James Cournoyer, of North Smithfield, gets to the heart of the matter (after noting that public employees are paid workers, not volunteers):

... a public employee who starts working at age 25 with a $30,000 salary and annual raises of 3.25 percent will contribute $74,425 to the pension system over 20 years, assuming a contribution of 9 percent of his annual salary. Then, at the tender age of 45, that employee can begin collecting a pension equal to 50 percent of his highest five years that will grow by the almighty "cost of living" adjustment every year for 30 years, assuming a life expectancy of 75. Thus, the employee who contributed a mere $74,425 to the system will receive payments totaling $1,230,000 if he receives annual 3 percent cost-of-living adjustments. This is unsustainable, unfair and unacceptable.

Plowing streets and answering 911 calls entitles Hanson to a paycheck. It does not entitle Hanson to early retirement on the backs of his neighbors.

"Tricky" Sue Menard

It appears that Woonsocket Mayor Susan Menard has been channeling Richard Nixon. She had a secret recording operation set up in her office.

The mayor has a concealed audio/video recording system installed in a credenza behind her desk in her City Hall office.

The device recently came to light during a work session regarding the latest in the battle between the City Council and the mayor over the council’s investigation of whether city employees have misused city resources. The mayor has filed an injunction to prevent the council from conducting its investigation. In the latest twist, the mayor has asked that three council members be deposed regarding the investigation....

“It has recently come to light that there exists within the Mayor’s office a concealed audio/visual recording system, this notice shall also include any and all audio and video recording made with said system,” [Woonsocket City Council lawyer Raymond] Marcaccio says in the letter.

Paranoid?

No Priority for Energy

Michael Zey's op-ed, yesterday, enunciates the factors indicating that the United States of America is just not that interested in developing energy independence — much less developing energy as an export industry.

As the Platts report plainly states, without a growing energy supply, countries face "declining growth rates, diminished standards of living, and growing transfer of wealth from importing to exporting countries." In other words the U.S. either enlarges its energy pool or just waits for accelerating gasoline and electricity prices to erode its global economic competitiveness over the next several decades. ...

Last year saw the first applications for new nuclear-power plant construction in the United States since the 1970s, with 31 new plant-license applications soon to come. ...

Several U.S. governors, purportedly concerned about "greenhouse-gas emissions," have vetoed construction of coal-burning power plants in their states — at least 45 coal plants were abandoned in 2007. ...

The High Arctic region's resources are also critical to U.S. energy independence. But if the government accedes to demands to classify that region's polar bear as an endangered species, we cannot tap the estimated 10 billion barrels of oil in the Arctic National Wildlife Refuge (ANWR), equal to the next 10-15 years of oil imports from Saudi Arabia. A planned privately funded natural-gas pipeline to transport to the U.S. mainland some of the 35 trillion cubic feet of natural gas from Alaska’s North Slope would also be scrapped.

The list of such wasted opportunities is painfully long.

It's a positive thing that we're circumspect about our methods of creating energy, but by thus burdening our homegrown industry, we wind up funding anti-humanitarian regimes and doing the environment no good in the process.

Interpol Confirms FARC Data

We've heard a lot from Democrats for, what, the last 8 or so years, about how the U.S. should listen more to the "international community." Maybe we should (h/t):

The information found in the computers of the deceased leader of the rebel Colombian Revolutionary Armed Forces (FARC), Raúl Reyes, was not manipulated by Colombian authorities, according to an Interpol's report to be released next May 15, as disclosed by Bogota El Tiempo daily newspaper.

The report stated that a committee comprising computer science experts from Korea, Australia, and Singapore working for the International Criminal Police Organization (Interpol) completed last May 2 the investigation into the three computers found in Reyes' camp in Ecuador, Efe reported.

"The first finding was that Reyes' files were not manipulated and that security agencies and citizens who had the computer in their hands kept them safe," the Colombian newspaper stated.

Commenting on the story, Gatewaypundit summarizes the laundry list of info discovered on the computer.

-- FARC connections with Ecuadorean president Rafael Correa
-- Records of $300 million offerings from Hugo Chavez
-- Thank you notes from Hugo Chavez dating back to 1992
-- Uranium purchasing records
-- Admit to killing the sister of former President Cesar Gaviria
-- Admit to planting a 2003 car bomb killing 36 at a Bogota upper crust club
-- Directions on how to make a Dirty Bomb
-- Information that led to the discovery of 60 pounds of uranium
-- Letter to Libya's Moammar Gadhafi asking for cash to buy surface-to-air missiles
-- Meetings with "gringos" about Barack Obama
-- Information on Russian illegal arms dealer Viktor Bout who was later captured
-- FARC funding Correa's campaign
-- Cuban links to FARC
-- Links to US Democrats
-- $480,000 of FARC cash in Costa Rican safe house
-- $100,000 to President Correa's campaign for election
...And, more.

Pope Sees a Fragile but Inspirational America

Father Roger J. Landry of the Diocese of Fall River has some thoughts on the meaning of Pope Benedict's recent visit to the U.S. (h/t). In particular, he focuses on how the Pope called on our own founding traditions to reinvigorate us.

He came to speak to all Americans: to remind us who we are, what our particular cultural and political inheritance is, and inspire us to treasure, protect and advance it.

For Benedict, the greatest part of that inheritance is the way our constitution and culture has protected religious freedom. In an interview on the plane coming to our country, the Holy Father said that America’s founding fathers understood and applied a crucial paradox: that the best way to preserve religious freedom was to have a secular state.

Father Landry notes that the Pope, in a seeming echo of Edmund Burke, makes a critical distinction between the "positive concept of secularism" held--and handed down--by the American founders and the "negative European secularism flowing from the French revolution." The Pope believes America can serve as the “'fundamental model' for Europe," but that many Americans believe in the European model instead of that of their own heritage and they must be persuaded to re-think their position. Why?

If this corruption of the positive American secularism continues — whereby faith becomes a civic virtue rather than leads to moral virtues — then the entire American experiment in self-government is endangered. This is not an exclusively papal insight, but, as the Pope himself noted, the clear conclusion of Presidents Washington and Adams as well as Alexis de Tocqueville. The 265th pope quoted the first president, who in his farewell address said that “religion and morality represent indispensable supports of political prosperity,” and added, “Democracy can only flourish, as your founding fathers realized, when political leaders and those whom they represent are guided by truth and bring the wisdom born of firm moral principle to decisions affecting the life and future of the nation.”

Veritas.

Jim Baron's Biggish Thoughts on Smallish Legislation

I tried to excerpt down Jim Baron's weekly column in today's Woonsocket Call, but couldn't find much to cut out. It's worth fighting through the lack of proper spacing between paragraphs to read the whole thing.