12/15/09

Are Tax Increases Coming?

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.

5 comments:

  1. Raising taxes in the depths of the Great Recession? If it's done, you will see a mass exodus and the state will declare bankruptcy. The General Assembly will nix the governor's proposed budget revisions. It's time to consolidate the municipalities and the state departments. Taxpayers will revolt if the income tax and property taxes are raised.

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  2. Agreed. This is a real bad situation we're in. That's why we shouldn't rule out getting hit with higher taxes - either at the local level, depending on the community one lives in, or at the state level. I can foresee an expansion of the sales tax as a distnct possibility. Also, the flat tax, will be under a tremendous amount of pressure going forward.

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  3. Taxes will go up. There is no question about that. I don't want to be a naysayer. I love Rhode Island and will stay as long as I can. The situation we find ourselves in is a culmination of a lot of factors, many of which have taken years to develop. Sadly, there seems to be little leadership in this crisis. Thank God our state motto is "HOPE". It's all we can do.......oh yeah and VOTE!

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  4. Very few except the Governor are looking at the source and severity of our problems. An increase in taxes is not going to fix the problem by any means, in a few years the state will be back to the same issues we face now. The state and fedral government have become the crutch for the lazy and unmotivated. State programs are needed to help those individuals who are in dire straights, but most people know that these systems are being abused. Without demanding an all out attack on corruption and wasteful spending we will continue to contribute to a system that cannot sustain itself.

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  5. The State Tax increases are just one of the Problems, add to that the Federal Government health care bill Tax increases and the Global warming Tax increases coming my self and many Rhode Islanders are in big trouble !

    I am barely hanging on to my house and barely making my mortgage payments as it is !

    The Federal Government passed NAFTA GATT and several other free trade agreements and ever since then Jobs for everyone is suffering .

    I am working 2 jobs now for less than what i made when i had one job and health Care !

    If they increase taxes i will lose my house .

    BOB Cumberland

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