November 15, 2007

Re: Time for Cities and Towns to Tighten Their Belts

Donald B. Hawthorne

I want to second Marc's concluding thought in his prior post.

The Rhode Island budget deficit elephant is sitting in the middle of the room and people are still trying to ignore - or, at least, downplay - its very presence.

How long has this elephant been present without any real acknowledgement? A long time indeed.

As is typical in most crises, denial of the problem is the first place where many people get stuck. That is the problem here in RI right now.

NOBODY in this state has stepped up and truly challenged the failing status quo. The Governor only talks about cutting 1,000 jobs and other minor tweaks. House Finance Committee Chair Constantino only talks about no increase in any local aid. Meanwhile, others like the NEA continue to demand contract terms which blow spending past the tax cap lid.

All of that means the boldest moves so far amount to rearranging the deck chairs on the Titanic. While most people continue to party on as if nothing is amiss.

A deficit of roughly $450 million means there are structural problems to the state government's economics. Structural problems don't get solved by making only incremental changes on the margin.

It will take a previously unseen level of courage and bold action for someone to alter the political debate so we all finally face the elephant and deal with the structural issues. The issues won't go away and delaying the day of reckoning will only make things worse in the end. Whether we want to talk about it or not, a lot of economic pain will be incurred before this debacle is resolved.

If I was either the Governor or a State House leader, here is what I would do:

  • Gather a small group of key players in the state, reaching across party lines. Tell them I was going to be a visible state champion for an emergency effort to address the structural problems.
  • Invite others to join me in becoming fellow champions for change, while also telling them that the effort would proceed regardless of their involvement or opposition.
  • Inform them that the political paralysis of past times requires outside help in evaluating the financial dynamics.
  • Remind them that there can be no sacred cows, no untouchable programs.
  • Publicly tell the cities and towns to budget for next year as if there was a 5% across-the-board decrease in state aid so they have enough time to go back and re-open negotiations over existing contract terms.
  • Give the evaluation process a limited amount of time to complete its work, say 60-90 days. People who are participating in that evaluation process need to be clear that a crisis situation means there is no time to waste, that things have to happen at a pace previously unheard of in government.
  • And then, since entrenched behaviors only change with the proper incentives, inform everyone that we will move to put the state of Rhode Island into receivership if the recommendations are not acted on legislatively within 60 days thereafter.

People can argue over the particulars but focusing on those details won't fix the massive problems faced by the state. Nor will debating the viability of public sector legal options. Arguing over those matters is a distraction from facing the fundamental problem: The state of RI has an untenable economic structure which, so far, nobody has shown the will to address head-on and fix.

With a wealth of experience in crisis management turnarounds in the private sector dating back nearly 30 years, I can assure you that nobody so far in RI is dealing with this crisis in a manner which bodes well for the future of the state and its many hard-working citizens. Acknowledging the presence and large size of the elephant in the room is the first place to start. Only then can we find the collective will to begin solving the very real problems.

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I agree with the premise that focusing on details won't fix the massive problems, but Carcieri could do all of the things listed in this post and they would have absolutely no effect. Why? Because Carcieri is not the "CEO" of RI. He is the Governor.

Unlike a business, where most employees understand that the broader goal of the company is to make money, most voters and special interest groups don't look at the broader picture. They look only at the things that directly impact them.

So long as voters and special interest groups put pressure on state representatives and senators to keep funding expanded state services, there will be no reform.

In the end, voters get what they deserve in a democracy.

Posted by: Anthony at November 15, 2007 11:00 AM

It is common that substance abusers can't be helped until they hit bottom and acknowledge that they have a problem - up until then they rationalize and deny that they have a problem.

So it is with "tax addicted" welfare pimps and public sector unions - they go to the Pusher General Assembly and buy more tax fixes with campaign support, which the petty (and corrupt) little people at the General Assembly are all to happy to provide.

Given the caliber of people who inhabit the Democrat General Assembly, and their track record, we should all operate on the assumption that this declining state is going to have to have a hard landing at the bottom before the necessary changes will begin.

We're in for some tough years ahead.

Posted by: Ragin' Rhode Islander at November 15, 2007 11:25 AM

What's this 'we' crap? I'm moving back to Massachusetts.

Posted by: Greg at November 15, 2007 11:49 AM

Dear Don,

What does this mean:

If I was either the Governor or a State House leader

Would you run on the platform you proposed?? (2 of the items are non-starters for most people, the rest seem doable)

By the way, private sector experience is nice for a private sector job. Political change is built on consensus. When you have a figure who creates a "non-consensus" environment just by his presence, you'll never get anything positive done.

Posted by: Bobby Oliveira at November 15, 2007 12:25 PM

Hey Bobby. When YOU can get elected to something THEN you can start giving classes on how to get elected to stuff. Until then how about sitting down and shutting up?

Posted by: Greg at November 15, 2007 1:13 PM

Did Gov. Sundlun have a consensus when he closed the credit unions? Apparently he had enough executive power to get it done. He was frequently assailed by depositors who blamed him for their own gullibility. It must have greatly rankled him, as a Jew, to be compared to Hitler. There will be no popularity contest winners over the next few years.

But where does that leave Gov. Carcieri? Does he have another hammer besides the threat to furlough 20% (or whatever it takes) of the workforce under his control? What would that hammer be? I certainly don't want the credit union crisis solution - 1% sales tax bump, never rescinded of course, and $700XL borrowing.

SooperSekrit message to Bobby-O. You don't need to kneejerk remind me that the credit union crisis was in part the fault of a Republican. He got jail time. Not enough, mind you, but more than the donks in the GA are likely to get for behavior that ought to be criminal but probably isn't.

Posted by: chuckR at November 15, 2007 2:27 PM

Dear Greg,

When I'm not the candidate, I have an over 80% winning percentage. In other words, I've earned my way in. When you get there, let me know . . . . (remember, RI Field Coordinator for this guy named Clinton, that alone gives me a lifetime exemption)


At the time, he reached out to leaders in both houses and asked for non interference. He didn't say "go along", he said "please sit on your hands" and "I'll take the rap".

I don't know what this Governor's hammer is but I do know that if he starts with some of his own staff, he gets more play.

(I always thought the credit union crisis was a bipartisan deal. It was a GOP guy who cashed in but a lot of Democrats helped create the environment)

Posted by: Bobby Oliveira at November 15, 2007 3:26 PM

There's a toughie. "I was the local lead suck-up for the guy that was wearing a "D" and I delivered him the bluest state in the union."

Wow. So impressive. Next you'll brag that you're responsible for water remaining wet and the sky continuing to be blue.

Justin, seriously. Why? What does "Mr. Look how great I am!" really add to the party?

Posted by: Greg at November 15, 2007 3:33 PM

Dear Greg,

That's right, there were no primaries that year, I forgot. Nobody set up the buses to Manchester to assist in the comeback kid effort. Nobody went to Little Rock to organize local volunteers with the means, read money, to travel into the best areas. Nobody spent 37 days on the road fundraising after the Primaries were over. Nobody kept Paolino, Sunlun and McKenna from killing each other. No one kept all the volunteers from killing Mark Weiner.

Hey keyboard commando,

What do you bring to the party??

Why don't you addres my actual post for once.

Posted by: Bobby Oliveira at November 15, 2007 4:16 PM

Sundlun's predicament was precipitated in large part by the RISDIC crisis. Sadly, the current predicament is the result not of one event, but several bad decisions made over the years.

Carcieri has warned about this happening for years, as have some fiscally responsible Democrats.

It's time to pay the piper.

Posted by: Anthony at November 15, 2007 4:30 PM
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