Report proposes $225M in cuts to Chafee’s budget

PROVIDENCE, R.I. (WPRI) – Advocates of lowering Rhode Island’s sales tax are often told they won’t be taken seriously until they spell out what should be cut from the state budget to make up the difference in revenue. On Wednesday, they did just that.

A new report from the Rhode Island Center for Freedom and Prosperity, a three-year-old think tank that advocates smaller government and has driven the push for a lower sales tax, suggests $225 million that should be cut from Gov. Lincoln Chafee’s proposed budget for the 2014-15 year, equal to about one-fourth of expected sales tax revenue next year.

The largest cut would come by eliminating the proposed $50 million increase in the state’s historic-preservation tax-credit program, which the Greater Providence Chamber of Commerce and its allies have championed for years. A savings of $12.3 million would be achieved by eliminating this year’s payment on the bonds sold to benefit 38 Studios.

Other eight-figure cuts would eliminate $17 million sought by the R.I. Department of Education to replace expiring federal funding; $15 million for the Unified Health Infrastructure Project (UHIP), a new portal for social services; and $10 million that Chafee says will allow the state’s three public colleges to freeze tuition next year.

“These recommendations represent only a small portion of the cost savings available to state lawmakers by reducing waste, fraud, and abuse of tax dollars and by spending the public’s money as carefully as they would their own,” the report suggests.

The report was put together by the Center for Freedom’s Justin Katz along with Drew Johnson of the Taxpayers Protection Alliance, a Virginia-based nonprofit that also advocates smaller government. Mike Stenhouse, the center’s CEO, called a press conference for Wednesday afternoon at the State House to lay out the report’s suggestions.

In January, Chafee proposed a budget that would increase Rhode Island’s state spending by 4% to $8.5 billion in the 2014-15 fiscal year, which starts July 1; about a third of the money would come from the federal government. The Democratic-controlled General Assembly usually approves a final budget by late June.

Many of the changes proposed by the center are relatively small in the context of an $8.5 billion tax-and-spending plan, with 38 of the 74 specific cuts saving less than $1 million, including $775,000 for the Volvo Ocean Regatta; $65,771 for a maintenance supervisor at Goddard State Park’s golf course; and $50,000 for repairs to McCoy Stadium.

Other cuts would save significantly more. For example, the center proposes eliminating nearly $13 million for the former R.I. Economic Development Corporation, now known as the R.I. Commerce Corporation; $11 million for the General Assembly’s controversial legislative and community-service grant programs; and $8.4 million for the Governor’s Workforce Board, which hands out money to employers.

Opponents of the proposed cuts quickly pushed back.

Preserve Rhode Island, a nonprofit that advocates preservation, argued that the historic tax credits are a worthwhile investment by state government that spurs building and employment, citing a study that found previous credits generated $1.3 billion in private investment and 6,000 permanent jobs, as well as 22,000 temporary construction jobs.

The Rhode Island State Council for the Arts, an agency targeted for a $2.3-million cut by the report, said the state is right to spend an estimated 0.0007% of general revenue on the arts and that federal money would be lost if it was converted into a private nonprofit. The council also said the report had mischaracterized the projects it has funded.

“In a democracy we can have an honest debate on public support for the arts,” Randall Rosenbaum, the council’s executive director, said in a statement. “That debate takes place in every state, every year, and it always comes out the same.  For pennies on the dollar, public support for the arts makes sense economically, educationally and in promoting a high quality of life.”

Not everything in the report would be a cut, however.

The center calls for the establishment of a “fully empowered” Office of the Inspector General, which could investigate misuse of public funds; an Office of the Repealer (or, alternatively, a Joint Committee of the Repealer) to track down out-of-date state laws and regulations; and a state version of the Grace Commission, which President Reagan organized in the 1980s “to uncover waste, fraud, abuse, and mismanagement of tax dollars.”

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

An earlier version of this post gave an incorrect total for the General Assembly’s legislative and community-service grants.

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