Our tour of the state budget documents continues. We leave the Executive Summary for the time being (we’ll be back for the all-important schedules and for the invaluable predictions of the future), and move into Volume I.
Volume I covers “General Government”, which includes the offices of all the elected officials, and the departments of Revenue, Business Regulation, and Labor and Training. Plus the Department of Administration which holds all the central functions. It’s also got all the quasi-public agencies like the Economic Development Corporation, RIPTA, the Airport Corporation, and Resource Recovery, who runs the state Central Landfill. For each department and agency, there is a summary page, and then a page for each of the major divisions. This is the part of the tour where the guide is supposed to tell funny jokes to fill up the travel time as you cruise from one interesting locale to the next.
The legislature’s budget is in this volume, so let’s look there first. The overall budget for the Assembly is about $41 million this year, and the Governor is proposing to cut it by a little more than $1 million, about half from supplies and expenses and the rest from the grants budget. There’s no change in the number of personnel, and it looks like they’re anticipating a 3% raise for most everyone, and — what’s this? — it’s the rising cost of health care, just like everywhere else. Remember, no matter what you’ve been told, it’s rising health care costs that are pushing up the cost of your government more than anything else.
Legislative grants
Oh, wait, did you want to hear about the infamous grants budget? This is the source of the legislative grants, random bits of money awarded by the leadership to reward this or that legislator for helping out around the place. It mostly goes to non-profits in the legislator’s home district, like say, Dan Doyle’s Institute for International Sport that we’re hearing so much about these days. They apparently got $575,000 in 2007 for a fabulous building on the URI campus that remains unfinished today.
There are also plenty of excellent, well-run non-profits who get support this way. The problem is that the way these grants are awarded has a lot to do with ring-kissing and begging and maybe not so much to do with merit. Lots of ring-kissers have other merits, but when merit isn’t the main criteria, you’ll undoubtedly get some who are better at the kissing than the service. (This makes the occasional screw-up like the Institute into the fault of some specific person, though no one seems to be saying who just yet.)
How much does it cost? On paper, you’ll see a grant budget line item of $2.8 million in the current year, and the Governor is proposing to cut it back to $2.3 million. The way the system works, though, there is much more than that available. The way it works is that lots of the dollars will wind up as line items on the budget of some agency whose mission is vaguely related to the non-profit’s. So a theatre might get a grant and it would come directly from the RISCA budget, not from this line item. This is a problem both because it provides less money for the agency mission, something that you can’t see from the budget documents, and because counting all those grants isn’t possible from the outside.
What else? One can’t help but notice that despite the modest cut Governor Chafee has proposed, the legislature’s budget is up a healthy 42% in ten years, 2003-2012, about 3.5% per year. This is somewhat less than overall state expenses, which are up 48%, but it’s embarrassingly close to the 42% rise over that time in the statewide property tax levy. One thing you’ll hear if you wander around the halls of the State House and talk to legislators is complaints about out-of-control municipal budgets. What those legislators don’t seem to understand is that the town councils and mayors are doing pretty much as good a job as the legislators.
It’s easy to understand legislators not noticing this. What’s less forgivable is the way they keep voting to cut taxes without cutting their own budget. Over that decade 2003-2012, we saw a capital gains tax cut, an income tax cut for rich people, and several high-profile tax credits pass the Assembly. At none of those times did anyone propose a proportional cut in the Assembly’s own budget. Cuts for thee and not for me. If you care about controlling costs in government, this is the kind of behavior that has to be rendered embarrassing (or at least politically dangerous) for elected officials.
Time to move on. Next stop: DMV!
Read the previous posts in this series.
“What’s less forgivable is the way they keep voting to cut taxes without cutting their own budget”
Gee Tommy Boy, where can I get MY tax cut. My property taxes have done nothing but go up in my 40 years in this state. Gasoline taxes-up. Tobacco and alcohol taxes-up. Sales tax-up. Tax on that great luxury of food-up. Hotel and car rental-up. Cable, telephone, natural gas and electricity taxes-up, up,up and up. Registration and license fees-up.
Income tax? Oh, when I was born Tommy Boy there WAS no income tax and we had better roads, better schools and a better economy-by far.
Now the progressive geniuses who have given this state half a century of “prosperity through taxes” want to raise the already high state income tax by 70% and the tax on that ultimate luxury item-food-by 25%.
Progressives-good for a laugh but not good for anything else.
Prior to the introduction of our state income tax in 1971, you had the most socialized system of federal government in the history of this country. I’d guess that’s where the state got most of its money. So since you appear to be advocating for a return to the top federal tax rate of anywhere from 72% – 91%, I think you’ll find a lot of people would love to see the government flush with that kind of money to distribute to the relief of the states.
Samuel –
Would you work for 10 cents on the dollar? How many people do you think actually paid that 91% top rate?
The gov is spending more today than it has ever spent in its history (save for maybe WWII). The gov’t has plenty of cash.
It’s not the job of the federal gov’t to bail out states who can’t manage their finances. Just like we’ve seen countless times before, bailouts only incentivize the actions that caused them.
Yes, I would! After taxes, that would still be an incredible amount of money. If I made a million dollars a year, I’d have $90k after taxes. Although it probably wouldn’t effectively be 91%, since I’d be able to hire an accountant to get me better tax breaks. Plus, there’s a lot of social assistance via tax breaks that I’d be able to qualify for from the government. So I’d probably have more than $90k to spend each year. Buy some treasury bonds, and I’d be able to collect interest on that. Even making $90k a year I’d be far richer than I expect I’ll ever be.
I imagine that after a while, I’d have adjusted to that level of income, and then I might start complaining about how much the government was taking from me; but maybe I’d feel as a Korean War veteran once told me; that when he was in that bracket he lived just fine. I don’t need a mansion (nor do I particularly want one), I don’t need some fancy car, and I don’t need to spend conspicuously.
In fact, think of all the money I’d save! I’d be able to buy quality things that wouldn’t fall apart after a few uses, so in the long term, that would be great. If I needed a loan, I’d qualify instantly, and be able to pay it off quickly, so no long-term loans that end up costing me a ton of money. My savings would do great from the interest. I’d be able to make investments. And people would treat me better because I had a ton of cash. And I’d be making so much money that there’d be a huge incentive to keep working; why would I stop? Plus, if I ever felt like it, I could tell any member of government “my taxes pay your salary” and it’d be true. And if I ever felt like my money wasn’t doing right via government programs, I could start/donate to a charity and write it off that way and still keep my money.
So in short, being rich is great. I hope I am someday.
Finally, it wouldn’t be a bailout of the states, it’d be funding them to provide services for their citizens, via citizens’ taxes. That seems like a legitimate use of taxes to me.
This is just insanity. Nobody would stay in America long if they were actually being taxed at a 91% rate when they could just move to another country – just because you claim to not care about material possessions doesn’t mean that nobody else does, and the things rich people buy, like huge houses, create jobs for other people that wouldn’t otherwise be there (government jobs are a poor and inefficient substitute). That’s also not at all how charity tax deductions work. You can’t just donate a bunch of money, “write it off,” and get your money back. There are limits and you only get a fraction back.
I’m a salaried employee, so taxes don’t really discourage my current career path or how hard I work in it. However, they absolutely discourage all of the additional jobs/consulting I would be doing on the side. Why should I work my ass off substitute teaching or consulting on weekends for $30-80/hour when government is just going to take a third of it anyway and give it to some old person who paid practically nothing into social security to spend in the casinos in Florida, or a disability cheat, or health care for illegal aliens, etc.? It’s not worth the trouble with the taxes factored in and I can’t take any pride in it. If it was actually helping people, maybe it would be a different story, but I know that’s just a progressive lie.
Right, because so many Americans fled our country during the 1950s and 1960s. I forgot about that mass exodus. They don’t teach that in history class.
As Bob pointed out, nobody paid even close to those rates after about a thousand credits, deductions, etc. An effective 91% tax rate would drive virtually all wealthy people out of this country.
@RTW — well, maybe not drive out the wealthy people themselves, but certainly their money would leave.
“Yes, I would! After taxes, that would still be an incredible amount of money. If I made a million dollars a year, I’d have $90k after taxes. Although it probably wouldn’t effectively be 91%, since I’d be able to hire an accountant to get me better tax breaks. Plus, there’s a lot of social assistance via tax breaks that I’d be able to qualify for from the government.”
Whew!
Did you actually read what you just said?
You just advocated welfare for anyone making a million dollars a year.
Grow up kid. You don’t know sh** about how the world really works. The whole progressive world is collapsing all around you from Europe to Japan to Cali-phony-ia to sanctuary city Providence.
No, I said that the rich already get welfare.
EDIT: Enlighten me, Mr. Sims. How was your golden era of the 50s and 60s funded?
Nothing personal, but I have a hard time believing you. If your employer said you were worth an additional $1M, but you took home just $91k of that, you’d rightly be furious.
Imagine all the people you could help and good you could do if you had the $909k the gov took from you. Instead, politicians took your money so they could give it to their corporate buddies. That’s just as good though, right?
Gov taking your money by force and giving it away is the politicians telling you they know how to spend your money better than you. If that isn’t the most insulting thing you’ve ever heard, it’s certainly on the waiting list.
“Finally, it wouldn’t be a bailout of the states, it’d be funding them to provide services for their citizens, via citizens’ taxes.”
Nonsense. But let’s look at it at a more local level. If someone in a town over from you couldn’t manage their money, spent far more than they took in, and a politician decided to take some of your money and give it to them to help them shore up their budget (as opposed to reducing their spending), what kind of situation do you think that sets up? Rather than make the tough decisions and prioritize spending, you’ve allowed them to put off that decision for another day. And what happens next year when the same situation arises? How long until you realize you’re just subsidizing their income?
Do you REALLY think anyone ever actually paid those rates?
Do a little research, you keep embarrassing yourself.
Okay, so, looking into the research, few in 1960 actually paid 91% of their income. The top .01% paid on average 71%. But frankly, that doesn’t seem to undercut my point. It undercuts the point of those who are arguing that raising taxes would create a mass exodus of rich folks. My point is that even with a 91% effective tax rate, you’ll still be pretty well off, especially if you fall into that bracket. Certainly by comparison with virtually everyone else.
But as people have been keen to point out, few to no one in 1960 actually had an effective tax rate of 91%. Which is good, because taxing everyone at that bracket at 91% wouldn’t be great. So I want to make clear, I’m not advocating that the ultra-rich should be effectively taxed at 91%. I am arguing that the de jure tax rate could be 91%, and the effective tax rate could be much lower.
Now, I don’t believe jgardner’s point that I’d be livid to make only a fraction of my income after taxes. Frankly, I think it’d probably all be a step up. Chances are, I would’ve worked my way up from a low starting point. Unless there was some income sweet spot in the 1950s and 1960s where making a smaller amount of money would yield you a better after-tax income (I find that unlikely, due to the obvious social problems that would cause), then almost every increase in income would mean more money. I wouldn’t be starting from $1 mil., I’d be working my way up in after-tax income. So I’d already be prepared on how to spend.
As for the argument that the rich spend their money lavishly, I’m not sure if you’re advocating that the rich should be irresponsible spenders or not. I’m saying that the well-off can easily afford to protect their investments and control their spending. They can also buy better quality items, and they don’t fall into the poverty trap; which includes things like payday loans for example (don’t think for a second that folks who take payday loans don’t know they’re getting screwed).
You can’t escape the fact that the 1950s and 1960s were probably the most socialized this country has ever been. More people paid taxes, they paid more of them (Reagan eliminated taxes on the poorest). So if things were booming in terms of schools and roads as bob sims says, then how was that being funded? My guess is government funding, as a result of post-Depression policies.