Look South, Rhode Island

I just returned from a Thanksgiving holiday in the People’s Republic of Rhode Island, the state of my birth. It was my first trip there in 8 years. Throughout my childhood I could never quite figure out why the good Lord would place me in an area where the culture, in every respect (political, social, economic), was so contrary to my own values. I tend to think that he just wanted me to appreciate my beloved State of Texas.

As I crossed the state line into Rhode Island from Massachusetts (we landed at the Boston-Logan Airport), I was immediately taken aback by the obvious infrastructure problems the state was facing. The roads may have been the worst upon which I have ever traveled! But apparently, according to a Providence Journal article I read, the State of Rhode Island has a plan… One which will do nothing more than sink Rhode Islanders into a further abyss of economic woes.

Rhode Islanders reap what they sow; it is a state that has been in Democrat hands almost completely since the 1930’s. Democrats outnumber Republicans nearly 4-to-1 in Rhode Island today and they maintain this control despite an abysmal record (Also note that Rhode Island’s Republicans are some of the most liberal in the nation- Lincoln Chaffee should come to mind). Amazingly, they have a decent Republican governor in Donald L. Carcieri, but a man made impotent by Democrat dominance in the legislature.

Rhode Island has strong union dominance in every corner of business and government, from supermarkets to teachers unions. According to successful former General Electric CEO Jack Welch (a Massachusetts native), “[Rhode Island is] not a right to work state. It's driven all big business out of the state. It is a state that has 80% of the business[es] in the state employ 20 people or less.”

Welch continued, "Rhode Island has the... second highest [taxes] in the nation. 48th worst state to do business." He asserted, “… they tax the hell out of you, and you don't want to be there. Welch lambasted the New York times for an article it published stating, “[The Times] talked about all the job losses on the front page, and then it swung over to the middle of the paper, and the paper had two pages on the state of Rhode Island, and it had these tragic stories of who was out of work, a hairdresser, a restaurant owner, somebody else, but they didn't make the connection of why they were out of work."

"Rhode Island had the highest unemployment in the country. 8.8%. 40% higher than the country," He concluded, “And that's a small picture, and The Times didn't make the connection with these tragic stories which were tragic -- didn't make the connection with what the tax policies of Rhode Island are with the plight of the state."

So what do we know when we compare Texas and Rhode Island’s economies? Consider the following (Statistics from June 2007-2008):

• Texas was responsible for 73.4% of all net job creation in the United States.
• Rhode Island was responsible for -3.6% of all net job creation in the United States.
• Texas was responsible for a staggering 289.8% of all net private-sector job creation in the United States.
• Rhode Island was responsible for a staggering 1.4% of all net private-sector job creation in the United States.
• Employment level in Texas increased by 2.4%
• Employment level in Rhode Island decreased by 2.4% (The irony…)
• Texas has one of the lowest state tax burdens at 9%.
• Rhode Island has one of the highest state tax burdens at 12.7%.
• Texas' unemployment rate is 5.6% (as of October 21, 2008, better than the national average)
• Rhode Island's unemployment rate is 9.3% (as of October 21, 2008, far worse than the national average) *

And in 2008, Rhode Island elected even more liberal Democrats to the legislature. As I told a friend, Rhode Islanders are like the struggling guy who says “I’m going to buy $100 worth of lottery tickets every week this year, hit the jackpot, and pay all of my bills.” After 52 weeks, he realizes that he lost the vast majority of his $5200. So his solution? He decides, “Next year I’ll just have to buy $200 worth of lottery tickets every week!” And so it goes… Rhode Islanders think that the solution to their problems is more government, less liberty, and sticking with those who think sucking more tax dollars out of the pockets of their citizens is the key to prosperity.

I wish these folks would figure out what Texas has know for a long time… Leave business alone, let them grow, reinvest, create jobs, and from a booming economy, sales taxes will bring in greater revenue. I just count my blessings that I live in God’s Country!

Mike Pearce

* Statistics complied by Will Franklin, formerly of the Texas Public Policy Institute

To repair Rhode Island roads, report calls for new tolls, taxes and higher fees

09:32 AM EST on Friday, December 5, 2008
By Bruce LandisJournal Staff Writer

PROVIDENCE — Driving your car may take on a new and larger meaning — for your wallet.
To fix its crumbling roads and bridges and rescue the state’s financially challenged public transit system, a draft report made public yesterday says the state should consider charging tolls at the state line on every interstate highway and creating a new tax for each mile a vehicle is driven.

The report calls for tolls on a new Sakonnet River Bridge, increasing the state gas tax and a long list of other things related to using the roads. One proposed tax would apply to anything made from petroleum, from paint to detergent to plastics.

The proposals would mean a drastic shift in the way the state finances transportation — away from borrowing and near-complete reliance on federal money — toward spending more by using money raised through taxes and fees.

It could also mean a large policy shift on public transportation. The Rhode Island Public Transit Authority is in such financial trouble that officials have been planning major service cutbacks and calculating just when it would run out of money during the next several months. The draft report includes plans to save the bus system from immediate dismemberment by covering its $8-million budget deficit and to maintain existing service for at least 10 years.

The panel, Governor Carcieri’s Blue Ribbon Panel for Transportation Funding, was formed because the lack of maintenance over the years has caught up with the system. More than half of the state’s roads are in fair, poor or “failed” condition, according to the Department of Transportation, and 164 bridges of 772 are classified as structurally deficient.

Two of the state’s most important bridges, the Pawtucket River Bridge, carrying Route 95, and the Sakonnet River Bridge, carrying Route 24 to Aquidneck Island, have 18-ton weight limits, are off-limits to large trucks and need to be replaced before they get worse.

The panel is supposed to produce a final report shortly. The members took no votes yesterday but seemed in agreement on most of the major elements of the plan. An exception that will apparently be removed involved diverting some state sales tax money that is used to support the existing state budget. The recommendations will go to the governor, and most would also need approval by the General Assembly.

Carcieri has not endorsed any of the recommendations.

“We’re not ready to decide what we’re going to choose,” spokeswoman Amy Kempe said. However, the panel is co-chaired by the governor’s top present and past transportation appointees, DOT Director Michael P. Lewis and Jerome F. Williams, the previous DOT director who is now state director of administration.

The draft report, prepared by the DOT, includes two “scenarios,” one producing an estimated $150 million per year and the other $300 million per year, the amount the DOT says it really needs to make necessary repairs within 10 years.

The major elements include:
•Both new and higher fuel taxes. The proposals include increasing the gasoline tax, now 30 cents, by up to 15 cents per gallon by 2016, which would raise an estimated $64 million per year. They also include a new “petroleum products gross earning tax,” beginning with the equivalent of 10 cents per gallon of gasoline in 2010 and adding another 5 cents in 2014. That would affect all petroleum products, from gasoline and aviation fuel to those made from petroleum derivatives, such as plastics, paint and fertilizer. It would eventually raise about $66 million per year, the draft report says.
•Car registration fees, now $60 for two years, would rise $40 per year immediately and could more than double, to $140, by 2013, depending on which version was used, raising up to $46 million per year.
•A new mileage fee. The $150-million plan would not include it, but the $300-million plan would impose a half-cent-per-mile fee, raising an estimated $50 million per year. But officials said yesterday that they expect to eliminate the transfer of some sales tax revenue to the transportation system, proposed elsewhere in the report. Raising the mileage fee to 1 cent per mile would make up the difference.
At a half-cent per mile, driving 10,000 miles per year would cost $50 per vehicle. One cent would cost $100.
Also referred to as a VMT fee (for vehicle miles traveled), the mileage fee would be based on odometer readings reported by vehicle owners when they renew their registrations. The mileage could be verified during mandatory auto inspections, the study says. Robert A. Shawver, the DOT’s assistant director, said that although one state, Oregon, is pilot-testing a similar fee, Rhode Island’s would be the first of its kind in the country.
•Tolls. The $150-million plan could include tolls, $3 per car and $6 per truck, only at the Connecticut border, yielding an estimated $39 million per year. The $300-million plan would include similar tolls where all of the state’s interstate highways (Routes 95, 295 and 195) cross the state line, and would raise $60 million per year.
While most of the other fees and taxes would affect primarily Rhode Islanders, the tolls would be aimed at out-of-state vehicles which, if they pass through the state without stopping for fuel, now use the roads for free.
•Tolls on a new Sakonnet River Bridge. The plan relies heavily on shifting the estimated $210-million cost of a new Sakonnet River Bridge, now the DOT’s responsibility, to the Rhode Island Turnpike and Bridge Authority. It also assumes that the authority would borrow the money to pay for the bridge and charge tolls to pay the cost. Shawver said it isn’t clear how much the tolls would be, but guessed they would be in the $3-per-car range. That would take the cost of the new bridge off the DOT’s hands, while giving the authority the prickly job of imposing the tolls.
Some recommendations, such as a higher gas tax, could be put into effect quickly. Others, such as tolls, would take years to put into effect. Lewis said the state would try to implement the tolls jointly with Massachusetts and Connecticut, building one set of tollbooths and splitting the money.

The DOT has had a series of expensive embarrassments involving its construction projects over the years. One question yesterday concerned the agency’s ability to efficiently spend roughly twice as much money per year as the $354 million it spends now.

Suzanne Greschner, policy director at the Rhode Island Public Expenditure Council and a panel member, said she looked through the draft report and found nothing about making sure that the DOT can handle the money effectively. Taxpayers, she said, need to know that the money would be spent effectively.

Several of the proposals are certain to be controversial. In addition to imposing new taxes and sharply higher fees that would affect most citizens, one is already starting to heat up an old regional dispute.

Putting tolls on the new Sakonnet River Bridge attracted loud opposition in the past from legislators whose constituents now use the existing deteriorating bridge for free.

Yesterday, Keith W. Stokes, executive director of the Newport County Chamber of Commerce, denounced the toll proposal and said he wanted to know why tolls on the heavily traveled Washington Bridge, on Route 195 in Providence, isn’t one of the proposals.

One major difference between the two plans involves borrowing. The $150-million plan would rely on $450 million in borrowing, something that has already gotten the DOT into a financial hole. The $300-million plan would eliminate the borrowing and rely instead on higher registration fees and the proposed tax on mileage.

blandis@projo.com