November 18, 2011

Even the Pension Bill Succeeds in Making RI Less Business-Friendly

Patrick Laverty

One of the very few amendments that was successful in yesterday's pension bill Assembly session was put forth by the Finance Chairmen in both the House and the Senate. Helio Melo in the House and Daniel DaPonte in the Senate. The amendment reads:

42-149-3.1. Assessment on state expenditures for non-state employee services. –
Whenever a department, commission, board, council, agency or public corporation incurs expenditures through contracts or agreements by which a nongovernmental person or entity agrees to provide services which are substantially similar to and in lieu of services hereto fore provided, in whole or in part, by regular employees of the department, commission, board, council, agency or public corporation covered by chapter 36-8, those expenditures shall be subject to an assessment equal to five and one-half percent (5.5%) of the cost of the service. That assessment shall be paid to the retirement system on a quarterly basis in accordance with subsection 36-10-2(e).
Basically any time the state needs to outsource a project, that business/contractor must pay the pension system an extra 5.5% of the contract. A new tax.

Wouldn't it seem that this provision really just made everything more expensive for the state? If I want to provide a service to the state that would normally cost $1M, well now I need to charge the state $1,055,000. It seems yet again, they think that when you tax a business, they're just going to eat that cost and not pass it along to the customer. But in this case, the state is the customer, and when the state is the customer and it is using state money to pay the contract, guess where that comes from? The taxpayers. Haven't we talked about this before?

On the Matt Allen Show today, General Treasurer Raimondo said that this 5.5% new tax had been discussed in concept but other than that, she wasn't aware that it was going to be enacted. This amendment was brought out by the Finance Committee chairs at the last minute? Why? If anyone has access to alter the bill during the hearing process, it is the chairs. Why didn't they put it in during the hearings? The impact was never studied, why was this done at the last minute?

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why is it allowed to right into the retirement fund. another scam!

Posted by: bob at November 19, 2011 5:34 PM

I still cannot completely accept that Chafee would go against the unions and support the pension reform bill. Sooner or later, we are going to see the hands that he is playing and we are not going to like it.

I was told that the 5.5% tax, which will be paid into the retirement fund, was to appease the union hacks in the General Assembly who did not vote for the pension reform bill.

I do think the intent was to force the state not to look outside the state for contractor jobs.

Posted by: Roland at November 20, 2011 12:56 PM
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