Scott MacKay Commentary: Raimondo's Budget Politics

Mar 13, 2015

Gov. Gina Raimondo has proposed her first state budget. RIPR political analyst Scott MacKay looks at the politics of our new governor’s taxing and spending plan.

Credit Kristin Gourlay / RIPR

It’s difficult to argue with the rhetoric behind our new governor’s $8.6 billion budget plan. In her televised address from the Statehouse last Thursday evening, Raimondo outlined her goals in a convincing fashion, hitting all the high notes.  Her smorgasbord of ideas provides a little something for everyone.

Cheerleading for economic development, advancing education, making government work better, cutting social security taxes and delivering health care in a more efficient manner are goals that every Rhode Islander can get behind.

Yet, as is often the case in the era of the permanent campaign, the rhetoric doesn’t match the reality. Questions abound in this Raimondo spending plan. If we really want to forge a better economy for our older, struggling cities, do we go along with her plan to chop $5 million from the state aid program known as Payments-in-lieu of-Taxes? That is only going to hurt Providence, which would lose $2.5 million, and Cranston, forcing property taxes up in those communities.

Is it smart to slap nursing homes with millions in budget reductions, then force their labor costs up by jumping the minimum wage to $10.10 an hour? Who doesn’t want to soak the swells, but is it reasonable public policy to establish an unprecedented statewide property tax (the Taylor Swift tax, as in she of the zillion-dollar Watch Hill mansion) that would be levied on vacation homes worth $1 million or more?

The governor’s idea to refinance millions in state debt to take advantage of lower interest rates seems like a fine idea, a creative way to free up money for needed investments. But should any of this one-time money be used for year-after-year operating expenses? If that’s the case, that all the Raimondo Administration is doing is stretching out the state’s debt to grab some quick cash.

There is probably no more politically popular notion than getting rid of state income taxes on social security for individuals earning $50,000 a year or less and couples earning $60,000 or less. Old folks vote and what state rep or senator doesn’t want the re-election boast that he or she cut granny’s taxes.  Plus, this is a pet project of House Speaker Nick Mattiello, D-Cranston, whose support Raimondo is going to need if she wants to get anything done.

But first we ought to have a debate on whether this is responsible public policy. We know that nearly 22 percent of Rhode Island children live in poverty, according to Rhode Island Kids Count. The grand virtue of social security is that this New Deal-era program has virtually eliminated poverty among the elderly. Would this money be better used to invest in children rather than slicing taxes for their grandparents?

The governor seeks about $90 million in cuts to Medicaid, the joint state and federal program that pays medical costs for the poor and elderly. Raimondo has outlined a series of cuts on hospitals and nursing homes, but is asking the General Assembly for more time to come up with proposals to cut more than $40 million.

You may not like the big hospitals and the bloated salaries earned by executives of these supposedly non-profit institutions. But they are huge employers of thousands of health professionals from Burrillville to Block Island. They are threatened by competition from Massachusetts, especially the big Boston medical meccas. Obamacare has helped reduce the free care hospitals are required to give to anyone who shows up in an emergency room.  The Raimondo budget would take some of that money away, making it likely hospitals would lay off workers.

Attracting more tourists is a laudable goal. Consolidating tourism advertising also seems like a very smart idea. The governor could help here. The next time she is at a big national conference attracting gobs of free media exposure, she should talk about our wonderful beaches, historic sites and fabulous restaurants. That would be better publicity than running down Rhode Island, saying we are a state run by corrupt General Assembly hacks ensnared in midnight budget chicanery.

There is much to applaud in our rookie governor’s budget. She is fully financing elementary and secondary education aid and increasing public college support by nearly 4 percent. Expanding the earned income tax credit to help working poor families is another good move. So is beginning to repair crumbling school buildings. And ditto for fixing bridges and our pothole-filled streets. And urging the bruised Rhode Island psyche to put the Carcieri-era 38 Studios mess in our collective rear-view mirror is great.

Delivering state services more efficiently is excellent policy. But Raimondo needs to better explain how she intends to slice $22 million from the state workers without layoffs or kicking the can down the sidewalk by trading money today for raises promised two or three years from now.

Now, the lawmakers Raimondo dissed as dopes in her recent appearance at a national governors confab in the nation’s capital get to consider her budget. Let’s hope they ask tough questions in the bright sunshine of the coming spring.

Scott MacKay’s commentary can be heard every Monday on Morning Edition at 6:45 and 8:45 and on All Things Considered at 5:44. You can also follow his political reporting and analysis at our `On Politics’ blog at RIPR.org