What to make of the Governor's proposed supplemental budget? The biggest hits will be taken by RI's cities and towns, their school departments, and by state retirees. The Governor wants to eliminate - permanently - the car tax reimbursement, which will be devastating to many municipalities, especially major ones like Providence and Warwick, and could tip smaller communities like North Providence and West Warwick into insolvency. (more...)
School departments would lose some $41 million from now until June. And state retirees would lose - again permanently - COLA supplements. Even the state's hospitals would take big hits on the Governor's proposed withdrawal of state aid to compensate the hospitals for the care they must provide to those who cannot afford to pay.
All this is causing shock waves across the state, as well it should. What will happen to these proposals to close the $200 million operating gap remains to be seen, because General Assembly lawmakers, who ultimately decide, won't accept these cuts without forcing significant revisions. That's the way they traditionally treat the Governor's budget proposals. But where else will they turn to make these cuts? Raising taxes is seen as an absolutely last resort, but we're getting closer to that drastic action, believe me.
This of course is the result of years of neglect and one-time fixes by the legislature, a delinquent legislature that has yet to really bite the bullet on the state's financial black hole. It certainly appears that the time of reckoning has come and action must be taken. Raising taxes might help the state pay its bills but it's going to hurt the rest of us, and when the rest of us are hurting that in turn will adversely affect the state.
Personally, I see tax hikes on the horizon - on top of the rest of it. I just don't see how the state can manuever its way out of the necessity to raise revenues, and that has got to mean raising taxes and fees. Remember that in addition to this operating shortfall the state faces annual structural deficits for years ahead. True, some of the Governor's proposed permanent reductions in spending-sharing will reduce that structural deficit, but it won't eliminate it entirely.
Am I too pessimistic in believing that taxes will have to raised? Let me know your thoughts.