Chamber News

This is your RISC-Y Business email for July 22, 2010

RISC ANNOUNCES SPEAKERS FOR

AUGUST 7 ANNUAL SUMMER MEETING

Steve Malanga, Senior Editor of the Manhattan Institute’s City Journal,  former Executive Editor of Crain’s New York Business and published author will discuss both the nation’s and Rhode Island’s fiscal problems and business struggles as the keynote speaker to the RISC Annual Summer Meeting on Saturday, August 7th, beginning at 8:30 am at the Hyatt Hotel, Goat Island, Newport.

Arlene Violet, recently named spokeswoman for the election campaign of the RISC Business Network (RBN2010) will also address the breakfast meeting, expected to draw several hundred attendees.

RISC News Release, Veteran business journalist and Manhattan Institute writer and auther Steve Malanga, RBN Spokeswoman Arlene Violet to give keynote speeches at RISC Annual Summer Meeting, July 22, 2010

Click here for an invitation to the RISC Annual Summer Meeting on August 7th!

Today's News!

Rhode Island Statewide Coalition is on FaceBook and myRISC.com

RISC Business Network is on FaceBook , Twitter, LinkedIn, and myRISC.com

THE RACES ARE ON!!

SEE RISC TV FOR MORE INFO!

SENATE AND HOUSE SEATS ARE SEEING CHALLENGES IN ALMOST EVERY DISTRICT! THIS IS AN HISTORIC MOMENT FOR RI, AND RBN 2010 IS AN HISTORIC IDEA WHOSE TIME HAS ARRIVED!!!

We've reached the $100,000 mark in funding and campaign pledges, but we need EVEN MORE PLEDGES to elect a slate of pro-business, pro-jobs candidates!

THIS IS AN AMAZING OPPORTUNITY TO CLEAN UP RI AND GET SOME FRESH BLOOD FLOWING IN THE STATE LEGISLATURE! ARE YOU IN?

WE MAY NOT HAVE SUCH AN OPPORTUNITY AGAIN!

TELL EVERYONE YOU KNOW:

RBN2010.COM IS GOING TO CHANGE THE R.I. GENERAL ASSEMBLY!!

FIND OUT MORE!

Vote on this week's poll: www.statewidecoalition.com:

The election effort of the RISC Business Network (RBN2010) is releasing its list this week of General Assembly candidates endorsed to-date. These candidates are signing a pledge to run on a pro-jobs/pro-growth agenda for the state. Would you be more inclined to vote for a candidate who has the endorsement of RBN than one who does not?

VETERAN BUSINESS JOURNALIST AND MANHATTAN INSTITUTE WRITER AND AUTHOR STEVE MALANGA, RBN SPOKESWOMAN ARLENE VIOLET TO GIVE KEYNOTE SPEECHES AT RISC ANNUAL SUMMER MEETING

Steve Malanga, Senior Editor of the Manhattan Institute’s City Journal,  former Executive Editor of Crain’s New York Business and published author will discuss both the nation’s and Rhode Island’s fiscal problems and business struggles as the keynote speaker to the RISC Annual Summer Meeting on Saturday, August 7th, beginning at 8:30 am at the Hyatt Hotel, Goat Island, Newport.
Arlene Violet, recently named spokeswoman for the election campaign of the RISC Business Network (RBN2010) will also address the breakfast meeting, expected to draw several hundred attendees.
“We are thrilled to have a veteran business journalist of the caliber of Steve Malanga address the membership of RISC during this fiscal crisis in our own state and in the midst of such a critical statewide and national campaign season,” says RISC President Jim Beale.
RISC Chairman Harry Staley adds: “All taxpayers in our state, whether they are an individual or business owner could benefit from the insight they will hear from Steve Malanga and Arlene Violet. We urge people to attend.”
Malanga’s newest book, Shakedown: The Continuing Conspiracy Against the American Taxpayer discusses how the current steep state and local government deficits grew out of budgeting and tax policies which favored a coalition of public sector unions and community activists over the individual taxpayer. In addition to being Senior Fellow and Editor at the Manhattan Institute, Malanga is presently a columnist for www.RealClearMarkets.com, an on-line business publication.
The Rhode Island Statewide Coalition (RISC) is the state’s largest multi-partisan taxpayer advocacy organization which presently maintains over 5,000 active members. The RISC Foundation advocates for local and state government reforms in the areas of tax and budget policy, public education and related issues.

Providence Property Owners Could Face Huge Tax Increases; Full Council Set to Vote July 26 

Warwick, RI - July 21, 2010...The Rhode Island Association of Realtors and the Greater Providence Board of Realtors is working to spread the word about a significant tax hike facing Providence property owners that will be voted on by the Providence City Council on July 26th.  If passed, some property owners could see an 88 percent increase in their taxes. 

On July 14th, the Providence City Council's Finance Committee voted to increase the property tax rates for residential and commercial property.  The residential property tax rate would increase from $24.21 per $1,000 of assessed value to $30.38, a 25.5 percent increase.  Additionally, the commercial tax rate would see a 17.8 percent increase from $28.60 per thousand to $33.70 per thousand.   Landlords may receive an even more significant blow if the repeal of the homestead exemption for non-owner occupied rental properties of 1 - 5 units is passed.  The exemption, which has been in place for decades, exempts the first 33% of assessment value from the tax, resulting in a discounted rate of $16.14 this year.  Loss of the exemption coupled with the tax increase could result in an 88 percent increase in taxes from year to year for some Providence property owners.  According to a July 16th report in the Providence Journal, property owners will receive revised tax bills next month.

According to Libby Isaacson, President of the Great Providence Board of Realtors, "Buyers made huge investment decisions based on tax laws that had been in place for years.  Then, just when the Providence multi-family market is struggling to get back on its feet, the City is looking to change the rules of the game.  This could drive the foreclosure market through the roof and that in turn will hurt the Providence rental market. The last thing we should be doing is driving people out of the city.  We need the economic base they provide."

 
Providence City Council Finance Committee Chair John Igliozzi was quoted in the July 20th Providence Journal as saying, "(Landlords) are business people, and they will probably not make as much profit as they are used to, and they are unhappy." 

"A lot of landlords have been struggling lately," commented Karl Martone, President of the Rhode Island Association of Realtors.  "More than 60 percent of multi-family sales are being sold through short sale or foreclosure. We should be working to get that number down, not increase it."    

RIAR is asking citizens to contact the Mayor at mayor@providenceri.com or 421-2489 and City Council members at council@providenceri.com or 521-7477 to oppose the property tax revisions, and to attend the Providence City Council hearing on July 26th. 

Westerly: Editorial: Any extra cash goes to taxpayers

SCHOOL BOND SAVINGS: $1.5 MILLION — WESTERLY HIGH SCHOOL WORK IS UNDER BUDGET.”

That’s the type of headline that attracts positive attention, as well it should. Overburdened taxpayers always like to know they are saving money where they can. And that our representatives are looking for ways to cut costs. Whether through a poor economy or good negotiating by our school building subcommittee, we have benefited.

Nearly a month into the high school renovation project, part of the overall $30 million bond passed by voters in November 2008, comes word that demolition is under way in the Ward building and 70 to 80 workers are on the site.

Also included in this summer’s work is replacement of 500 windows in the two building campus, relocation of child development, art and woodshop classrooms to Babcock Hall and demolition and abatement of the new science and engineering wing in a portion of the Ward building with upgrades planned for 12 to 15 classrooms.

Project officials most recently reported that bids have been coming in under budget for an anticipated savings of $1.5 million.

The second part of the headline? “Subcommittee eyes second set of projects.” Not so much a headline that makes many taxpayers happy. It sort of rivals “Committee runs over budget, asks for more money to complete project.”

But that is not how it goes. The money should go back to those who funded the project — the taxpayer. It’s their money after all.

If a contractor is hired to build a house and the work comes in under the initial contract, the guy doesn’t build an extra room.

Westerly School Committee member Louis Sposato, during a recent meeting, said the board must keep in mind what was presented when the bond was “sold” to voters who supported the ballot question. He emphasized that it was stated that if $30 million was not needed, it would not be spent.

School board Chairman James Murano Jr.

said deciding the fate of the money may be premature since there could be unexpected expenditures in the future.

If there is $1 or $1.5 million left, the money should go back to give the taxpayer a break.

Westerly: Council endorses retirement incentive

WESTERLY - A cash offer has been placed on the table for eligible employees who agree to retire by the end of this month.

On Monday, town councilors unanimously supported a voluntary retirement incentive program proposed last week by the town manager. The town would pay seven retirement-ready employees $250 for each year of work for the town, under the program.

These workers, all age 65 or older, have until July 30 to accept the offer.

Click here to read more...

Woonsocket: City takes over school finances

WOONSOCKET - With the school Department already projecting a deficit of some $3.7 million less than a month into the fiscal year, the city has stepped in to usurp its spending authority, much as it did last year.

In a tersely worded letter, Finance Director Tom Bruce informed school officials yesterday that he was invoking a section of state law that makes it his duty to take control of the school department's financial decisions during such financial straits.

"All purchase requisitions, check disbursements and payroll registers must be delivered to my office at City Hall for my approval, or the approval of my designated staff member," said Bruce. "Any and all items which receive my signed approval may be picked up upon receiving a call from the City Hall Finance Department."

Bruce also ordered the school department from making any new hires without his approval, though he said he would bend to make room for contractual obligations or government mandates.

He asked for a list of non-contractual personnel as well, saying he could not rule out the possibility of cuts.

City officials released a copy of the letter shortly after Bruce and Mayor Leo T. Fontaine with Schools Supt. Robert Gerardi, School Committee Chairman Marc Dubois and other officials at City Hall.

"We really had no choice," Fontaine said. "We can't sit by and not take action. "The dollar amount rolled out as the projected deficit is based on the assumption that the School Committee can eke another $2.9 million worth of payroll concessions from current and retired members of the Woonsocket Teachers Guild, and taken in a $1.1 million "stabilization grant" from the American Recovery and Reinvestment Act. Otherwise the deficit balloons to the neighborhood of $7.6 million.

Teachers just ratified a contract offering some $3 million in payroll concession, including blanket co-pays of 20 percent for all teachers, even veterans who were grandfathered into free health care plans. But the state Department of Revenue is not allowing school officials to vote on the contract now because it wants them to impose the same co-pays on retired members of the WTG.

The interjection of the DOR into the financial decision-making process is an off-shoot of the city's broader fiscal problem - a projected deficit of some $12 million, including school and municipal shortfalls, for the fiscal year that just ended on June 30. The city needs the DOR's approval to seek a five-year note to close the gap, which has pushed the city's bond rating down to junk status.

DOR's supervisory role over the city's financial decisions is the price of its support for the so-called deficit funding bond, a highly unorthodox procedure for addressing financial deficits.

"Yes, we do have a deficit, and the city does have the authority to step in and approve any purchases or hires or anything we have to do," said Dubois, the school committee chairman. "But it's frustrating".

The school department is doing its best to reining costs and would have finished last fiscal year with a surplus had lawmakers not slashed some $2 million in promised aid at the eleventh hour, said Dubois.

The projected deficit in the current fiscal year is roughly the same size as the gap that existed between the budget the School Committee asked for and the one the City Council approved, totaling roughly $61 million, he said.

Dubois said school officials will do everything they can to avoid filing a Caruolo lawsuit against the city to cover its revenue shortfall. The Caruolo Act allows school committees to ask the Superior Court to compel their municipal counterparts to provide additional revenue - if school officials can prove they've been short-changed.

"We're going to go back to the teachers' union and say the auditor general and the mayor would like us to have co-pays for retirees," Dubois said, adding that he did not know what the response would be.

But Dubois said that even if retirees kick in at the same level as active teachers, only $300,000 in savings would be generated for the fiscal year. Meanwhile, every month that passes without the proposed WTG pact in effect amounts to an unnecessary expenditure of some $200,000.

Gerardi said he would ask the department's legal counsel for an opinion on whether the city's reading of Section 16.9.1 of the state's General Laws - the stature it cites in wresting control of the school department's purse strings - is overly broad.

"I do have some concerns and I plan on running them by our attorney," the Schools Supt. told the Call.

"It's my understanding that under the law he does have the authority to approve bills and expenditures.

However, in this letter he writes effective immediately all hiring of new employees must stop. There will be a problem because during the summer months we always hire the teachers we need to meet our contractual obligations and run the school system. As of right now we have more than 30 positions unfilled. You're talking about 600 students who don't have a teacher next year".

Gerardi and Dubois both pledged to work with the city in attempts to close the projected shortfall, but it remains unclear how they intend to do it.

Sports, music and other extracurricular programs have already been eliminated, and class sizes have been maxed out, said Dubois, adding, "I don't know what they expect us to do next."

The financial coup comes as a performance audit of the school department's books gets under way - a diagnostic that has been ordered by State Direction of Revenue Rosemary Booth Gallogly as a condition of supporting the deficit funding bond. The audit is intended to show whether the school department is as running as leas as it claims to be or, conversely, whether the city needs to amp up its contributions in order for schools to deliver the education they're required to by law.

"I'm hopeful they'll find savings," says Gerardi. "However, the reality is everyone in the district knows we're running a lean system. My concern is their recommendations won't equal the amount of savings needed to have a balanced budget."

PUC allows Deepwater hearing to go forward, but reserves right to toss it later

WARWICK – The R.I. Public Utilities Commission made no decision Wednesday whether to stop hearings on a proposed offshore wind farm. Instead, the commission said it would determine whether to dismiss the case after the entire case wraps up Aug. 11.

The commission is mulling whether to approve a power-purchase agreement between wind farm developer Deepwater Wind and utility National Grid. The PUC is considering the agreement under a law passed after commissioners rejected a similar contract earlier this year.

Click here to read more...

Higher taxes responsible for Europe's lower productivity

In 2004, the year he won the Nobel Prize, Edward Prescott, an economist at the Federal Reserve Bank of Minneapolis, published a paper titled "Why Do Americans Work So Much More than Europeans?"  The data were stunning, says James K. Glassman, former undersecretary of state for public diplomacy and public affairs and the current executive director of the George W. Bush Institute in Dallas. 

Prescott found that the average output per adult between 1993 and 1996 in the United States was 75 percent greater than in Italy, 49 percent greater than in the United Kingdom, and 35 percent greater than in France and Germany.  "Most of the differences in output," he wrote, were "accounted for by differences in hours worked per person and not by differences in productivity." 

Click here to read more...

AZ: State tells employees health insurance will rocket

State and university employees with families can expect to see their monthly health-insurance costs rise as much as 37 percent next year, depending on the type of plan they choose.

Figures provided by the Arizona Department of Administration show that health plans for families and single adults with children will shoulder the most-expensive monthly premium increases beginning Jan. 1, while individuals will pay modest increases.

The Department of Administration cited federal health reform as the reason the state's health plans will carry "greater expenses and higher premiums for members," according to a June 30 letter sent to about 135,000 state and university employees and their dependents.

Click here to read more...

Taxing our patience

Imagine that you just graduated college and you’re looking for your first “real” job. 

Now imagine that you have two job offers. One pays a 20 percent higher starting salary, has an overall benefits package worth 45 percent more and virtually guarantees employment for life and annual compensation increases. The only higher numbers offered by the other job are hours of work and years to retirement…

Like many of you, I watch the three-ring circus of governmental agencies with equal parts horror and disbelief. More than at any time in my life, I am concerned with what seems to be open contempt for business. You need not look too hard to see government’s blatant disregard for the well-being of the private business sector. And like many Americans, I am increasingly concerned about what is in store for those of us who proudly consider ourselves “business people.”

Click here to read more...

Home Sales and Prices Increase in June

Warwick, RI, July 22, 2009... The number of sales and median price of single family homes increased in June according to statistics released today by the Rhode Island Association of Realtors. Eight hundred and ninety-seven (897) single family homes were sold last month, far surpassing the 667 sales of the previous month.  Sales were up 11 percent from the June 2009 level of 805.  Median price rose five percent from a year ago to $220,000, and just over 10 percent from May's median price of $199,900.  With the exception of February of this year which saw a small decline in sales, the number of sales has increased year over year every month for the past 15 months and median price has increased since November 2009.  While statistics show that sales volume historically jumps significantly from May to June, it appears that the tax credit originally set to expire in June was also a factor in larger than normal gains from month to month.

"We typically see an increase in sales at the end of the spring buying season but this year we saw 35 percent more sales from May to June compared to a 21 percent jump last year. I think that's ample evidence that the tax credit had an impact," said Karl Martone, President of the Rhode Island Association of Realtors (RIAR).  "There have been some good things happening in regard to lending which should ease the difficulty people are having getting loans, and interest rates are still unbelievably low.  That also helped to boost sales and should keep the momentum going," he added.  

Click here to read more...

Candidates court seniors

PROVIDENCE — The six men vying to become Rhode Island’s next governor fought to distinguish themselves Wednesday on state pensions, taxes — and, more broadly, the role of state government — with occasional moments of pique rising out of the cordiality at the Laurelmead retirement home for well-to-do seniors on Blackstone Boulevard.

At one extreme was Republican primary contender Victor Moffitt calling for a 5-percent across-the-board cut in state spending to knock the $8-billion state budget back down to $5 billion over eight years.

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Major union backs Chafee in bid for governorship

PROVIDENCE — Former U.S. Sen. Lincoln D. Chafee has won the first major union endorsement in his campaign for governor from the Rhode Island Federation of Teachers and Health Professionals.

Attorney General Patrick C. Lynch had been an early favorite of organized labor.

But with Democrat Lynch now out of the race, Chafee appears to have been an easy choice for the federation which represents 10,000 workers across Rhode Island, including roughly 7,000 public school teachers in 11 districts, including Chafee’s home city of Warwick, and 1,000 state employees.

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Blue Cross eliminating 103 jobs

Blue Cross & Blue Shield of Rhode Island announced on Wednesday that it has eliminated 103 jobs throughout the company to cut expenses.

The nonprofit company said it cut 58 filled positions and 45 vacant ones as part of an effort to reduce expenses by $15 million over the next two years. Rhode Island’s dominant insurer still employs more than 1,000. Blue Cross last reduced the size of its work force in 2008, when 74 positions were eliminated.

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Should Retired Judges Get a Pension and a Salary?

A state senator is calling for legislation that would bar retired judges from collecting their pensions if they are also receiving a salary from the state, after retired Superior Court Associate Justice Mark Pfeiffer was appointed as receiver for the city of Central Falls.

“At a time when the state cannot properly fund education and can’t find the money to reimburse cities and towns for the automobile excise tax – so communities are turning to the property taxpayers – it is simply over the top for a recently retired justice who is already bringing in a six-figure pension to accept that kind of money,” said Sen. William Walaska, D-Warwick. “What ever happened to community service? What ever happened to volunteerism?”

Click here to read more...

15,000 RI Small Businesses Eligible for New Health Care Benefit

More than 82 percent of small businesses in Rhode Island may be eligible this year for tax credits to ease the cost of health insurance for their employees, according to a report released this week by national advocacy organizations Families USA and Small Business Majority.

“Many small businesses—like the local diner, the hardware store down the street, or the neighborhood repair shop—face special challenges in providing health coverage for their small number of employees,” said Ron Pollack, Executive Director of Families USA. “They will now receive substantial help.

Click here to read more...

RISC
P.O. Box 567, Charlestown, RI 02813/ Phone: 401-213-6316 / Fax: 401-213-6307

Email: info@risc-ri.orgWeb: www.statewidecoalition.com

The information included herein, not otherwise identified by source or author, is the copyright of the Rhode Island Statewide Coalition, Inc. "RISC-y Business", and the RISC logo are trademarks of the Rhode Island Statewide Coalition, Inc. Copyright © 2010 Rhode Island Statewide Coalition, Inc.