2014-01-24 / Opinion


Back to Basics

A nd we’re off.

Gov. Lincoln D. Chafee delivered his final “State of the State” speech to a joint legislative audience last week in Providence, setting in motion Rhode Island’s annual fiscal dance.

Like his previous three years in office, Chafee’s final 12 months are likely to be shaped by a debate over how to close a rather sizable budget gap. The good news – if you can call it that – is that state leaders will only have to eliminate a roughly $100-$150 million deficit before the start of the next fiscal year. While a massive amount equivalent to the whole of Newport’s annual operating budget, it’s significantly lower than the $300 million shortfalls that confronted taxpayers not too long ago.

The challenge for Chafee and other policymakers like Newport’s own Senate President M. Teresa Paiva-Weed (D) will be balancing the critical needs of the state with the desires of a resurgent business class that seem to be succeeding in spite of Rhode Island’s tepid business climate.

In his latest report on the state’s economy, noted University of Rhode Island economist Len Ladaro paints a mixed picture.

"The fourth quarter isn’t playing out as well for Rhode Island as we might have hoped,” he says. “For November, our state’s positive but not exactly stunning momentum continued. As has been true for some time now, there was both good news and bad news concerning Rhode Island’s economic performance.”

Perhaps most telling is that for a fourth consecutive month, and for the fifth time in six months, Ladaro’s indexing has failed to exceed the value observed at the same time over the previous year.

“Sadly,” he reports, “my earlier suspicion that a pattern of failure to improve on year-earlier values is proving to be correct. Let’s hope this doesn’t continue for much longer.”

Much of Chafee’s legacy as governor will inevitably be directly linked to how the state emerges from the Great Recession. We’ve progressed so far, there still appears to be some fundamental underlying issues holding us back.

With little room or appetite to cut any further into social services or government staffing, leaders at the General Assembly have begun exploring ideas that several years ago may have seemed improbable.

Among them: a proposal to eliminate – or significantly reduce – the state’s sales tax, which is regressive in nature. The proposal has found some uncommon allies between conservatives and liberal lawmakers, and the debate surrounding it should be one to watch, as should efforts to reform the corporate and estate tax structures.

As Ladaro notes, “The ultimate test of how robust this recovery proves to be will be defined by our ability to accelerate from current rates of growth. While more rapid national growth will clearly help with this, Rhode Island’s failure to meaningfully redefine itself for the information age (other than renaming the EDC) has left our state’s obstacles to more rapid growth, most notably our non-competitive tax and cost structure, intact.”

Regardless of its validity, Rhode Island has built a reputation as an economic backwater. Addressing the framework within which we live and work should be given the highest of priorities during this legislative session.

Chafee’s focus on the basics – things like roads, bridges, fiberoptics, and education – demonstrates that he may have a more realistic grasp on where the state stands than some of his critics give him credit for. And while his administration has been easily distracted by flaps over things like whether to call a Christmas tree a Christmas tree, it appears that his focus is singular as he heads into his final legislative session.

Now, it’s up to the General Assembly to demonstrate the same.

In other words, let’s leave the calamari bill on the floor and get down to business.

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