7/14/11

The House Budget, Civil Unions & Pension Reform

Now that the General Assembly has finished its work for the year, a few observations as we move into summer:

Praise for the House
The House of Representatives, led by House Speaker Gordon Fox, was the decisive body in steering a responsible budget to passage and joint House-Senate legislation signed into law by the governor. Fox and Helio Melo of the House Finance Committee are to be commended for their work. First, they wisely rejected Governor Chafee’s wild tax plan as a way to balance the budget on the backs of all Rhode Islanders. Then they turned to cutting state spending, which is exactly what the public wanted them to do. What emerged was a budget that required hard choices, especially in those areas of state spending that required cutting to balance a budget that carried a large deficit with it. Also of considerable merit was the House’s leadership in recognizing that ending automatic longevity raises for state workers was something that needed doing as a first step in getting at the structural debt these costs impose on us each year.

In contrast, the Senate leadership demonstrated once again its subservience to labor by passing binding arbitration and another bill that would have made it even easier for public employees to collect disability. This is the same leadership that apparently has no plans to modify the outrageous pay raise given to young Stephen Iannazzi and snubs attempts to address the matter in public. And Senate President Paiva-Weed has singlehandedly obstructed the first steps toward establishing a health benefits exchange by tacking on unnecessary language about payment for abortions. Again, we should be thankful more reasoned thinking prevails in the House.

Chafee’s Sales Tax Plan Could Have Cost RI Toray Plastics
The Governor’s sales tax plan might have fared better if there had been some sound reasoning and thorough analysis of the economic impact behind it, but that was not the case. Whoever came up with the infamous list of goods and services to be taxed at either six or one percent appeared to have approached each item with only one thing in mind – how much can we raise by taxing this, and not, what will this cost those who we’re taxing. The costs of doing business in the Ocean State are high enough already and businesses small and large don’t need more direct or indirect tax burdens in the cost and labor of collection and compliance.

Case in point is the $1 million price tag we at Taco estimated the new sales taxes would cost us. Now we learn that Toray Plastics in North Kingstown is considering whether to expand in Rhode Island or Virginia. Here the costs of doing business for Toray are exacerbated by the Deepwater Wind agreement that will increase Tory’s (and Taco’s) electric costs. As for the sales tax matter, the company is now on record stating that the proposed one percent tax on manufacturing equipment could have been a “deal breaker.” Again, didn’t anyone working on the sales tax proposal consider whether it was worth risking Toray and its 600 employees?

Same-Sex Marriage Not Necessarily a Liberal Issue
Despite not having the votes to pass same-sex marriage here in Rhode Island this year, in contrast to equally liberal New York, making civil unions law in the Ocean State represents progress on this front. This is a subject that people are usually firmly on one side or the other. It may seem odd that the Democrat dominated General Assembly can’t muster enough votes to make same-sex marriage a reality, but what it really shows is that there’s not a Democratic consensus on this particular issue. Apparently belief in the rights of gays and lesbian couples to enjoy same-sex marriage rights under state law is not necessarily a liberal issue that Democrat lawmakers easily join ranks on. You can believe strongly in the typical social justice issues but not approve of same-sex marriage, especially if you’re a Catholic Democratic legislator.

While many gays and lesbians naturally want nothing less than same-sex marriage rights, civil unions grant them virtually all of the rights they were formally denied and goes a long way in rejecting the legally sanctioned bias they previously had to endure.

Acting on Pension Reform
This is the issue that will really be the true judgment on the General Assembly’s work for the year. The study commission has started its work for the summer and will come up with a series of recommendations for the legislators to consider this fall when they meet in special session. The entire process needs to be closely watched by the public and hopefully will be transparent. What will be most telling is what the legislature decides to do with the study commission’s recommendations. They can weaken those recommendations or even toss them aside, but if they do they will have to come up with viable alternatives beyond bad ideas like refinancing the pension system or offering its debt to the owners of Twin River to buy. The fate of the state depends on true, comprehensive pension and healthcare reform – enacted this year.