November 27, 2008

"Everything is On the Table"

Monique Chartier

And not just because it's Thanksgiving.

In light of Speaker Murphy's comment in front of the Greater Providence Chamber of Commerce, a quick review of Rhode Island's current standing in certain tax categories is in order. [Data courtesy the Tax Foundation.]

> Business Tax Climate: 50th (worst)

> Cigarette Tax: 2nd highest nationally

> Corporate Income Taxes: 7th highest

> Property (local & state combined) Taxes: 5th highest

> Sales Tax: 2nd highest

Unless the Speaker intends to put forward only a token tax increase so as to provide political cover for implementing badly needed structural changes to the expenditure side of the budget, it is difficult to see any room for increase to this maxed out section of the budget.

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If I were the Gov. I would call Murphy and The Weed in for ONE meeting.
Outline the revolutionary changes needed-
1. COMPLETE overhaul of the pension system (state and municipal) to one which is permanently sustainable. Immediately, not just "new hires" Social Security plus a 3% 401k match. Police and fire work till 55; everybody else to 62.
2. Reduce the sales tax to 5%.
3. Complete repeal of all the unfunded mandates, Caroulo Act and absurd pro-union arbitration laws.
4. E-Verify.
5. Reduction of all welfare benefits to federal minimums.
6. Get the state OUT of the babysitting business.
7. All education, public works and "public safety" staffing levels are reduced to national medians. Yes this means prison guards, police and fire.
8. The "disability" scam is OVER. Employees will be free to buy their own disability insurance. Other than that they get Social Security disability like the rest of the suckers-er, taxpayers.

I would look them in the eyes and say
"if you're willing to make the needed changes I will work with you and take the political hits. If you balk at ANY of these I will take the easy way out. Submit budgets solely relying on local aid cuts, leave the ball in your court, veto whatever you come up with and put the blame solely on your shoulders".

Posted by: Mike at November 28, 2008 8:05 AM

The above list, and the one in the article it's attached to, should be permanently affixed to the upper left hand corner of this website, under the title "Our Positions", so visitors will know exactly what the problem is, and what needs to be done to fix it.

You guys know what the problem is, and how to fix it. Now what needs to be done is to educate the people and our elected reps, so we can get the necessary changes implemented.

Posted by: Erik D. at November 28, 2008 8:50 AM

Great post Mike.

The only difference I would suggest is to NOT shift the burden to the localities via cutting local aid.

First, make "local aid" (which ultimately is just education funding) vouchers on a per capita basis for each K-12 child. No "extra" for the kids in Providence etc. Then let the parents decide where to educate their children.

Second, submit a state budget and legislative package with the reforms you've suggested - one which ELIMINATES at least one major tax - income or sales - and which is balanced accordingly.

Then let the Democrat General Assembly explain to the seniors why, instead of under Carcieri's plan, they are going to raise their property taxes; explain to minorities why their children will still be trapped in the uncaring and incompetent arms of the teachers unions; to everyone why their going to have to keep paying sales and/or income taxes merely to keep the gravy train going for the unions and welfare industry.

Make them defend their actions in public rather than "huddle" in their corrupt back rooms.

Of course, other than some symbolic tinkering at the margins, they'll still stick with and protect their union and welfare constituencies - but if played right this distinction would become impossible for them to paper over, and isolate them.

A side benefit is that this would force bright-line differences between the Republicans and Democrats, and provide an RIGOP platform for 2010.

Posted by: Tom W at November 28, 2008 10:42 AM

"make "local aid" (which ultimately is just education funding) vouchers on a per capita basis for each K-12 child. No "extra" for the kids in Providence etc. Then let the parents decide where to educate their children."

Yikes. Can you hear the screaming even now.

Good list, Mike.

Posted by: Monique at November 28, 2008 4:48 PM

... wait, one suggested change to Mike's list. Disability insurance. Not eliminated. Despite prior moochers and their political patrons, we have to take care of our police and firefighters. Our disability insurance coverage should simply be in line with other states; none of this compounding insanity, for example. (Oh to just be average.)

Posted by: Monique at November 28, 2008 5:11 PM

You can't do that in RI Monique. No matter how much you reform pensions, if you continue disability pensions you will soon find that EVERY cop and fireman retires on a disability pension.
SSDI provides an adequate, though not the palatial they're used to, retirement. Plus COLA's and health care for life. BUT it is the expense of the federal government, not the local property suckers-I mean taxpayers.
Here in Cranston we just had 2 cops and a fireman rejected by the state for disability but (hard to believe-LOL) the lame-duck Democrat mayor wants the city to pay them the disability anyway-at a cost to the suckers of over a million bucks.

Cranston mayor and successor disagree over pension payout

01:00 AM EST on Friday, November 28, 2008

By Randal Edgar

Journal Staff Writer

CRANSTON — The mayor and the mayor-elect have each voiced a desire for a smooth transition as one man takes over for the other, but they disagree on one issue: whether the city should provide work-related disability pensions for three employees whose claims were rejected by the state.

The employees — two police officers and one firefighter — belong to the state Municipal Employees Retirement System, but the state Retirement Board has rejected their requests for work-related disability pensions.

With backing from Mayor Michael T. Napolitano, the police and fire unions are now arguing that the city should pay the difference between the standard disability pensions for which the employees are eligible and the work-related disability pensions they sought.

Lawyers for the city and the firefighters’ union say the request stems from the fact that the employees’ disabilities — which officials would not disclose — have been verified by doctors but were not recognized by the state Retirement Board because they developed over time rather than stemming from one event or injury.

Yet, state law says that a police officer or firefighter who retires because of on-the-job injuries shall receive not less than two-thirds of their pay at the time of retirement — the amount the employees sought through the state system.

The situation has left all three employees on the city payroll, at 100-percent pay.

And union leaders say the only way to get them off the city payroll is to have the City Council adopt two ordinances that would allow the city to make up the difference between the disability pensions the state will grant and the work-related disability pensions the employees want.

“The city is in a very bad spot,” said James Kelleher, lawyer for the firefighters’ union.

Ernest J. Carlucci, Napolitano’s chief of staff, said the ordinances would allow the city to take the employees off the city payroll and open up positions that otherwise cannot be filled.

The annual payroll and benefits costs for the three is about $202,000, while the city’s pension costs would be about $85,000 a year, said Corsino Delgado, the city’s finance director.

But Mayor-elect Allan W. Fung said paying a share of the pensions could cost the city more than a million dollars over the long haul, depending on the employees’ ages and salaries, which he did not have. And the city’s police and firefighter pension plan, closed to new employees since 1995, is already under-funded by some $200 million.

Fung also pointed to a state law that says Cranston police and firefighters who joined the state system waived “all accrued rights and benefits of any other” municipal pension system that existed before July 1, 1995, when many moved from the city to the state plan.

“The state system is supposed to be the only remedy,” he said.

Paul Saccoccia, a national representative with the International Brotherhood of Police Officers, said the issue is one of fairness.

Police officers and firefighters were told they would be entitled to the same benefits when they switched plans, he said.

The council is expected to consider the ordinances, which would also apply in future cases, on Dec. 15.

Posted by: Mike at November 28, 2008 7:14 PM

>>Police officers and firefighters were told they would be entitled to the same benefits when they switched plans, he said.

The union would have had copies of all plans before signing off on the change. The union knew what it was doing.

It is likely that it was the union officials themselves told the rank and file that the benefits would be the same, if it was said at all.

The union probably wanted the switch to the state plan as they recognized that over the long haul Cranston will never be able to fulfill the "negotiated" promises made on the municipal side.

Of course, now the State system is teetering too.

So the Ponzi Parade continues, now hoping that the Feds will come to the rescue.

And even if they do, unlikely since they don't have enough money either, the Feds are going to end up in the same position as the Baby Boomer crush starts collapsing Social Security, Medicare and "universal health care."

Maybe their hoping that be the the Chinese or Indians will bail out Cranston.

Posted by: Tom W at November 29, 2008 10:35 AM

>Maybe their hoping that be the the Chinese or Indians will bail out Cranston.

Sorry about the typos. Should be: "Maybe they're hoping that then the Chinese or Indians will bailout Cranston."

Posted by: Tom W at November 29, 2008 12:07 PM

Is SUV's for the bigshots in the GA on the table?Murphy needs to give his up and so does Paiva-Weed,unless Montalbano took it with him.
I was speaking to a "progressive" state rep(not David Segal) the other night and I felt like we weren't both using the same language,although technically we were.This guy had no clue about much if you ask me.He seemed to think that we are too stupid to make our own decisions,but when he explained his positions on a few issues he made no sense whatsoever.I let him know in no uncertain terms that I didn't like the way he was doing his job,but since I don't live in his district I am sure he could've cared less.

Posted by: joe bernstein at November 29, 2008 12:25 PM

"I was speaking to a "progressive" state rep(not David Segal) the other night and I felt like we weren't both using the same language"

Wrong Joe. He WAS speaking a different language. Namely-"progressivese". Where 2% revenue growth can support 8% spending growth forever and ever and ever amen. Where sales and excise taxes can be hiked ad infinitum and the suckers won't be smart enough to buy online, underground or cross-border. Where income taxes on "the rich" can be raised to conficatory levels without "the rich" leaving the state or quickly figuiring out how to establish residency (legit or otherwise) in a low tax state.
Those of us not blessed with millionaire daddy's or Ivy (Tower) League educations have an earthier word for this language-"stupidity".

Posted by: Mike at November 29, 2008 5:12 PM

Another prime example of "progressivese":
With the states 2 year deficit kissing a billion dollars, the highest per capita budget deficit of any state in US history, all the "leading economic mind" (sic) of the other blog can do is to tell the suckers to "stop the moaning" because the state is NOT overtaxed!;jsessionid=8DB89BEC6826BEBA3AA42855D7B5C5B1?diaryId=4766

Posted by: Mike at November 30, 2008 8:26 AM

As Barack Obama's father said (as reported in Investors Business Daily at this link

"What is more important is to find means by which we can redistribute our economic gains to the benefit of all," said the senior Obama, a Harvard-educated economist. "This is the government's obligation." The "means" he had in mind were confiscatory taxes on a scale that redefines the term "progressive taxation."

"Theoretically," he wrote, "there is nothing that can stop the government from taxing 100% of income so long as the people get benefits from the government commensurate with their income which is taxed."

That is the mindset of the progressive / collectivist / socialist/ communist / Marxist ... whatever their preferred nom du jour. So in their mind, Rhode Islanders are not overtaxed, for "overtaxed" is conceptually impossible!

Posted by: Tom W at November 30, 2008 11:00 AM
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