op-ed appeared in the Providence Journal, 19 November 2020 as "Saying no to an austerity budget in RI" This is the version as written, before being squeezed down to 650 words.
Reclaim RI is a new organization out there this year, organizing people to demand that legislators stop the austerity budget that everyone in the statehouse expects is coming. Unfortunately, in important ways, that ship has sailed, since we have been suffering under austerity budgets for a couple of decades. The question this year is only, "Will it get even worse?"
As vital public services and schools suffer, the rich are not paying their fair share. Not even close. The sad fact is that the last time there was a meaningful state tax increase on high earners (on anyone, actually) was in response to the credit union crisis and the economic slowdown that it provoked, back in 1992. That year, the legislature passed a surtax on the incomes of the top 10% of taxpayers. That tax (known at the time as the "90/10" plan) was repealed in 1994 by the state tax administrator while the legislature was out of session, using the excuse that the Clinton tax reform act of 1993 made it
unnecessary. This was an astonishing usurpation of taxing authority taken on behalf of Rhode Island’s wealthiest. But no member of the General Assembly was willing to challenge it in court, perhaps because they already had it in mind to follow suit.
And follow suit they did. The Assembly cut income taxes each year from 1997 to 2002, they cut capital gains taxes in 2001, established the "flat" tax to slash tax rates on rich people every year from 2006 until 2011, and rearranged those cuts in 2012 to make them permanent. The vast majority of those cuts went to benefit only the richest of your neighbors. The top income tax rate on the richest Rhode Islanders is now below 6%, down from over 12% in the early 1990s while the top rate on the median taxpayer only went down from around 4% to around 3.75%.
And it didn't stop there. We are currently in year three of a program to cut car taxes, though as of this year, the benefit will only accrue to people whose cars are worth more than $3,000.
So what's the problem? Don't people enjoy lower taxes? Do I yearn to pay more tax?
The problem is that exactly none of these tax cuts were paid for. Not a single time in the past 30 years can I recall a governor or speaker of the House or Senate president saying, "You know what? This tax cut is going to result in the end of this benefit or program, but I think it's worth it." Not once can I remember that kind of honesty from the tax cutters who have been in charge through these long decades.
Since 1994, all of those cuts have been made with the false promise that they can be had for free, with no sacrifice from anyone. That's why they're always phased in over several years, to make the constriction in revenue slow and unnoticeable. But the result is that every year the state tries to do more, with less. Instead, of course, they have done less for you. Less education, less environmental protection, less help for the poor. Legislators promise the state must do “more with less,” but we just get less instead.
There are a few ways to cut a government program: you can end it; you can do it more efficiently; you can borrow to hide the deficiency; you can find someone else to foist the expense onto; or you can just do a shoddier job every year and hope nobody notices. Over the past few decades, I can think of virtually no examples of the first, a small number of examples of the second, but lots of examples of the others.
The Department of Transportation is the champion at borrowing to hide their deficit. The practice was curtailed a bit under Governor Chafee, but now they borrow against future federal grants (so-called GARVEE bonding), which isn't so much better. And we borrow every year to build affordable housing, which is far more wasteful than simply budgeting money to do it. But hey, those bond lawyers and underwriters have families to feed, don't they?
Every mayor, town manager, and superintendent in Rhode Island knows the state has done more than its share to foist expenses onto them, and hold back funding. Mandates for water quality, land use, tax abatement, classroom accommodations, and much more have passed the Assembly without funding to pay for them. State taxes have been cut year after year because the General Assembly knows the mayors and town council members are there to take the heat for them and there's nothing they can do about it. That, in turn, puts more pressure on municipal taxpayers, which exacerbates inequality by putting the heaviest burden onto those communities least able to pay for it.
But the real crime is in the deterioration and shoddiness of state services. We have let the state's universities and public schools decay, along with our roads and bridges, and much more. We have watched as health inspections, labor and job safety regulation, environmental enforcement actions, and public transportation services have all declined. The state institutions meant to help the economy, like RI Housing, CommerceRI, or the Infrastructure Bank see their capital “scooped” from them to fund other state departments, depriving them of the funds they need to do their jobs. And our state's support for our neighbors who are struggling is abysmal: cash payments to help poor families with children have not increased since 1991.
So by all means, let's stop austerity. It's been terrible for Rhode Island, even if it's been a lark for the rich among us. And let's join Reclaim RI in holding the line to prevent it from getting even worse this year. The election season should serve as a wake-up call for those who favor the same old austerity since Reclaim’s candidates all won.
Call your legislator and demand they withhold their assent from a budget that makes things worse. And withhold your vote from the ones who refuse. Rhode Island deserves much better.