As has been amply reported by other writers here and in other places, the state budget has emerged from the mists of the Finance Committee, and will likely be voted on and passed this week. It contains no broad-based tax changes, though there are small increases in cigarette taxes, and small expansions of the sales tax, and tolls, to cover restoring 40% of the money cut from care to the developmentally disabled, and to fund the state’s education funding formula — the one that the legislature’s own study shows is inadequate. Due to more encouraging revenue projections than were the case last fall, some money has been restored to important places, but it’s just a bit here and there.
This graph is still the policy of the state:
That lower line is the effective tax rate on the median taxpayer. The blue line is the rate on the top 1%, and the red line is just thrown in there to show there is no relationship between taxes and unemployment.
The message overall from the legislature is that the cities and towns be damned. There seems no willingness to acknowledge that the fiscal crisis in the cities is largely the result of state policies. Tremendous cuts in state aid in 2008-2010 to both the municipal and education sides of city and town budgets brought fiscal havoc everywhere, and last week we had the spectacle of Lisa Baldelli-Hunt, a representative from Woonsocket, begging her colleagues in the legislature not to allow Woonsocket to fix the problems caused by her colleagues. Oddly enough, they complied, and now we have two more cities half a step from joining Central Falls in bankruptcy.
The sad fact is that by and large the people in charge of our cities and towns have actually been more fiscally responsible than legislators in the General Assembly, but they have less power, and so the Assembly leadership can pretend otherwise.
That’s quite a claim, isn’t it? How to back it up? How about this: as of 1990, Rhode Island cities and towns collected about $1.3 billion, between state aid, property taxes and various municipal fees. In 2008 — before the worst of the state aid cuts — they took in a bit less than $3 billion. This does not count the car tax payments from the state, which only offset taxes that towns would have collected from their residents. If you’re keeping score, that’s growth of about 1.9% per year — after correcting for inflation. This is troubling, but it’s not necessarily evidence of mismanagement. Inflation measures the price of goods and a few services, while towns spend their money on services and a few goods.
So how best to measure this if not against the inflation rate? If you want a yardstick with which to measure a service-oriented enterprise like a town, how about a private-sector service like Federal Express? Fedex is fiercely competitive, I hear, and non-union, to boot. How did they do? In 1990, it cost $11 to send an overnight letter across the country, and today it’s about $25.50 for the same service. After correcting for inflation, that’s up about 2% a year.
What about the state? After accounting for inflation in the same way, the state’s general revenue has gone up 2.4% per year since 1990, and overall expenses are up even more. (That’s the structural deficit and the rise in state debt you’re smelling.)
So who is being more responsible with tax dollars? The General Assembly, with members like Baldelli-Hunt who give lectures to municipalities, or the towns, who have controlled costs not only better than the state, but better than Fedex. But it’s the towns who get cut while the state basks in the adulation of business leaders who praise legislators for their tax cuts.
The main message of this budget bill is continuity. This is a budget motivated by policy choices virtually identical to the ones of the previous year, the year before that, the year before that, and so on. The idea is to squeak through another year with minimal pain to everyone, especially the wealthy. But it was to a large extent that very set of policies that brought us to the status quo: high unemployment, bankrupt cities, ever-rising tuitions at the state colleges, and lower taxes on rich people.
Do you like the way things are going around here? Hope you do, because the legislature is voting this week to give you more of the same.
“Fedex is fiercely competitive, I hear, and non-union, to boot. How did they do? In 1990, it cost $11 to send an overnight letter across the country, and today it’s about $25.50 for the same service.”
Nobody sends overnight letters anymore. Of course it’s more expensive to use what has become a practically useless specialized service. Fed Ex offers great rates and great service for things people actually use.
“Nobody sends overnight letters anymore. ”
You’re making that up.
“Fed Ex offers great rates and great service for things people actually use.”
The way you make a point by quoting ad copy is disturbing.
Trollin’, trollin’, trollin’…
Fed Ex delivered 627,000 overnight letters in 2011, up 2% on 2010!
That doesn’t really prove anything for a variety of reasons, but I’m not going to argue with you because you’re just trolling another thread and trying to suck me into the weeds, which is what you do in every thread you post in.
Hey, you know that awesome business Fed Ex? The one that “offers great rates and great service for things people actually use”?
Well, one of those services they offer is overnight letters! But “Nobody sends overnight letters anymore”!
That’s weird.
You’ve got to warn them! Tell Fed Ex! Even though they made $1.7 billion dollars delivering overnight letters in 2011, and even though Fed Ex “offers great rates and great service for things people actually use”, Fed Ex must stop delivering overnight letters…because nobody is sending them!
You’ve got to save Fed Ex, before it shows another 6% increase in revenues on overnight letter deliveries!
Save Fed Ex!
“You’ve got to warn them! Tell Fed Ex! Even though they made $1.7 billion dollars delivering overnight letters in 2011″
So they charged an average of over $2700.00 per overnight letter in 2011 and had zero costs? Yeah, okay. I’m going to just go ahead and not believe you.
Anyway, I never said it wasn’t profitable. That has nothing to do with my original comment or the point Tom was trying to make. This is why you’re a troll – you bait with a slightly off-topic post, then when the fish bites you go completely off-topic in full-blown thread annihilation mode.
Another wrecked thread. Congratulations.
Oh I left something out: 627,000 per day!
Ha ha ha ha!
Oops! My bad!
Does that count as a lot now?!?
“I never said it wasn’t profitable.”
What did you say?
“Nobody sends overnight letters anymore. ”
Oh. But Fed Ex alone has an average daily volume of 627,000. That sounds like a lot
Then you praised Fed Ex for providing great services! Except Fed Ex delivers 627,000 overnight letters a day, on average, which means Fed Ex must be pretty stupid.
Fed Ex doesn’t know as much about business or economics as you. Otherwise, they’d take the $1.7 billion they made from delivering all of those overnight letters and throw it in the street!
Okay well when you figure out your own numbers, let me know. Don’t hurt yourself in the process, please.
Still a small and historically declining percentage of their business.
As I already pointed out, I never said it wasn’t profitable. Obviously it is. What I said was that they have to charge more to keep it profitable.
None of which really matters much at all.
Thread = trolled.
“What I said was that they have to charge more to keep it profitable.”
Oh? Is that what you meant when you said overnight letters are “ a practically useless specialized service”?
That must be why “Nobody sends overnight letters anymore”.
But who are these nobodies who use this “practically useless specialized service” to such an extent that Fed Ex alone delivers hundreds of millions of them every year?
They must all be dummies! Fed Ex and their customers–all stupid!
”Thread = trolled”
I will try to make more completely unsubstantiated claims like ”Nobody sends overnight letters anymore”, in order not to be a troll!
Please don’t ban me from your site!
But FYI, I see the statistical report you are apparently looking at (thanks for not providing a citation), and what you deliberately failed to mention is that overnight letters are down 7% since 2008, which is the earliest date the report gives. You say 627,000 like it’s a lot for a worldwide shipping corporation – why don’t you tell the nice people how much of Fedex’s business was overnight letters in 2011, or how many regular packages it ships every day. That would require intellectual honesty, of course, and you’re not interested in an actual discussion. You just want a yelling match over nonsense, as always.
“overnight letters are down 7% since 2008″
Huh. I guess that means no one is sending any.
“why don’t you tell the nice people how much of Fedex’s business was overnight letters in 2011″
Why don’t you tell Fed Ex that they are making a huge mistake by offering an overnight letter service?!? What does Fed Ex know, amirite?
Unless it was entirely a political move to make the Woonsocket mayor look bad, I can’t understand why she killed the supplemental tax bill. Do they really think they’ll do much better in bankruptcy? As far as how more fiscally responsible the cities and towns have been, let’s not forget the reason Woonsocket ended up where they are…overspending their school budget by millions. As far as other communities, too many have critically underfunded pensions. I call it a draw between the state and cities/towns.