The Real Problem, Look in the Mirror

The editorial in Saturday's, July 28th Providence Journal, while concerned primarily with the merits or lack thereof of Blue Cross Blue Shield's actions regarding Landmark Medical Center, it presents an opportunity to examine a much larger issue - the tug of war between two competing philosophies;  leave business decisions to the marketplace and all will be well, or allow government to become involved with private business and industry and the people will be better for it.

"Certainly, Lifespan, which operates Rhode Island and Miriam hospitals and works closely with Blue Cross, has a financial interest in ending competition with Landmark, particularly for lucrative, simpler operations."  This suggests that concern for the bottom line trumps concern for the public's health.

If the health and well being of the Rhode Island population is the goal then there would appear to be a conflict of interest, as you clearly state:

"We do not know whether Blue Cross has concluded that driving Landmark out of business is its most profitable course, but surely it has a duty to serve the health interests of the people of Rhode Island. As the state’s people and their representatives see it, saving Landmark is greatly in the public interest." 

While it is easy to see that business will always act in its own self interest and thus might hurt the public in the process, it is more difficult to accept the reality that our elected officials do not always act in the best interest of the people either, often favoring one favored group over another.

It makes a very strong case for term limits and for much more public involvement and thought during election season.  

I'll bet the Olympics captured far more attention than this dry, boring topic. 

My Property Taxes Did What??

The use of property values to pay for the tax levy has one fundamental quality that differentiates it from all other forms of taxation: it always produces the requested revenue.  Regardless of the total value of a community or the amount of the tax levy, there is a tax rate that will generate the determined amount, always. Income taxes or sales taxes can never generate a specified amount of revenue by their vary nature.

There is very little disagreement about what property taxes should be used for; public schools, fire protection, police protection, road maintenance, libraries, parks etc.  However, there is a subtle effect of a tax on property which is rarely considered, most likely because this tax has been in use for so long that it is assumed it must be the right thing to do. But is it?  

Consider;  after every revaluation, in any city, thousands of property owners will actually pay a significant portion of their tax increase solely to lower the taxes of other property owners.  Is this also a legitimate purpose for one’s property tax dollars, to lower taxes for other property owners, often as not, owners of the more expensive properties?  

The best way to appreciate this phenomenon is to observe what happens when a community does not increase its tax levy and has a revaluation in the same year. The following example uses Barrington tax data for the revaluation year 2009 (but similar results can be seen with any town data). Taxes were recalculated after reducing the 2009 tax levy to the 2008 level.

Despite no tax levy increase, 33% of property owners would have received tax bills with an average increase of 41%!  The extra $2,900,927 paid by these unlucky people would have in essence, been paid to the 67% of property owners whose taxes fell due to the revaluation. Nearly $3,000,000 paid by one group to another with no benefit to the community which neither requested nor received additional funds. Can this be called a fair tax distribution?   

However, if towns don’t revalue, a new owner can buy a property and be taxed on an old, most often lower assessment - that too is clearly unfair yet it happened year after year. Revaluations correct this unfairness, but in the process create their own injustice for all existing owners, as the above example demonstrates. 

This is a dilemma that can’t be corrected with more accurate assessments or lower budgets, both of which are important in their own right.  

The challenge is to acknowledge this defect and to devise a tax system that addresses it.  The proposed “Property Owners Tax” (1) provides the needed revenue, (2) taxes new owners fairly every year, not every third year, and (3) taxes existing owners fairly and rationally every year.

It can be done. Please visit righttax.org to learn more.

Lower taxes will create jobs. Baloney!

"Lower taxes for the job creators". Really? The idea that business owners, especially small business owners, will create jobs if their taxes are lowered is a fantasy.

I might be considered a "small business" owner, (I had my own dental practice for forty years). In the beginning I had one employee, me. When I retired we were 12 including my partner, four hygienists and six auxiliary personnel. Taxes had nothing whatever to do with my so called "job creation". As we got busier we needed more people. That's not hard to understand, is it? If I had hired people because I got a tax break I'd have been a fool.

A small business doesn't actually "create jobs" - it responds to needs. If the need for its services increases it hires more people. If it has new products that the public wants it hires more people. A business owner who hires more people simply because its taxes are lowered won't be in business for long.

Lower taxes might increase profits, might make it easier to buy needed equipment, but create jobs? Nonsense.

Maybe it's just me.

Cardiac rehab before the heart attack

Gary Sasse and Robert Flanders wrote a sobering commentary piece in the Providence Journal on the options available to Rhode Island communities, more of which are facing the reality that they can’t pay their bills. They’ve made it painfully clear that the only option left might be Chapter 9 restructuring.

The comprehensive article describes in detail some of the important considerations and protections of a Chapter 9 filing that can bring them through their fiscal catastrophe without permanent stigma.

Among them are:

1. Bond holders, the people that actually lend the money to towns, are protected from loss,
2. Local governments have professional and accountable management,
3. Efficient and transparent communication with rating agencies and state government,
4. Cooperation from stakeholders,
5. Effective monitoring of negotiated agreements.

It would seem that if every municipality had been following the above prudent policies all along, few would have to face bankruptcy today.

It’s like people who suffer a heart attack; had they done their cardiac rehab activities in the years BEFORE their heart attack, far fewer would suffer one.

In addition, I would encourage that the names and votes of all those involved in municipal contract negotiations, both union and non-union, be made available on the web. If people know that their participation and actions will be permanently known to all, they might be more careful in making their choices, which now play such a huge role in the fiscal disaster that faces Rhode Islanders today.

Why all the fuss about Marriage?

The term marriage broadly means a blending of two separate entities into one. The difficulty we are having with the term marriage might be from the biblical interpretation - that the only acceptable reason for marriage is procreation, therefore only two individuals of the opposite sex should be allowed to marry. Since it makes an exception for heterosexual couples who are sterile, it blatantly discriminates against gay people.

Perhaps we could resolve this by recognizing two marriages. The first, a Civil Marriage, currently referred to as a civil union. This marriage would be available to any two unmarried individuals. The second, a Religious Marriage, performed by a priest, minister, rabbi or imam. In this marriage the religious institution would determine the requirements according to its precepts and beliefs.

Religious and Civil Marriages would be legally identical in every way except for where and by whom the marriage service was performed. Perhaps in this way we can respect the feelings and beliefs of both sides of this controversy.

But maybe it's just me.

So You Don't Like Change?

I've been advocating a change in the Rhode Island Property Tax laws for ten years. (see righttax.org) One aspect of that change deals with tax exempt property. We propose a method that would have helped Providence and other towns with a significant proportion of tax exempt property.

Using the numbers printed in "A FISCAL CRISIS" on Page 1 of the Journal, February 3, 2012, with the proposal of R.I.G.H.T., the city of Providence would receive $40 million from tax "exempt" properties. Would that help?

If state legislators had at least discussed some of the proposals of R.I.G.H.T. we might never have reached this awful situation in which we find ourselves. But, as a town official once said to me after I presented our plan, "I don't like change". See where that has gotten us.

Aren't You Tired of This Yet?

On Sunday, January 8, 2012, on page A14 of the Providence Journal there was a report by staff reporter Jennifer Jordan ("Is Achievement First a better model?").  In it was a statement that makes one gasp. According to the article, opponents of charter schools apparently said "Give the local schools decent financing, and they'll improve." Really?

According to the National Education Association, in 2009 Rhode Island spent $18,729 per pupil, highest in the country. But state performance rankings from the National Center for Educational Statistics for 8th grade reading revealed that we were only in 36th place nationally.  In 2010 the spending dropped to $15,803, fifth highest, but our students were still low, in 29th place.  Clearly Rhode Island local schools do receive decent funding - and if student performance were first or fifth it would be money well spent.

Decent financing is apparently not the problem given the above numbers. But neither is high stakes testing the answer, nor being able to fire poor teachers nor giving money to poor people.  There is no single answer and anyone who suggests otherwise is doing a disservice to the students and the people of Rhode Island.

We need a comprehensive approach involving first and foremost, the mothers and fathers of low performing students such that they improve their attitudes and expectations. NOTHING will work without that. We need to listen more to our many good teachers and enlist them in this crucial battle. We need to stop the partisan bickering about whether Democrats or Republicans, conservatives or liberals, union officials or school committees, public or private schools have the answer.

While we sling mud and point fingers our children suffer.  If we don't work together and restore the backbone of our great nation, an educated public, shame on us all.

A New Political Tactic?

The current rhetoric in the debates and in Congress sounds more and more like:

"Support whatever Obama opposes 
and oppose whatever Obama supports".

Now listen to Mao Tsetung: "Interview with Three Correspondents from the Central News Agency, 

the Sao Tang Pao and the Hsin Min Pao" (September 16, 1939), Selected Works, Vol. II, p. 272.

"We should support whatever the enemy opposes 
and oppose whatever the enemy supports."


Is this really the best we can do? 

Rethinking the Property Tax

It used to be a great idea; fund local government by taxing property. Before the industrial revolution the only significant source of income was land.  The owners of land, essentially royalty or the church, received income from lands in the form of rent or directly from the production of that land whose value was considered to be 20 years of derived income.

Thus it was sensible and fair to tax the value of that land as a source of local revenue. During that period, land values were quite stable.  If one's land were worth twice another's land it remained twice the value year after year and he paid twice the tax.

The result was a system of property taxes that was transparent, related fairly to one's ability to pay and was easy to assess.

Here's an Idea

We in North Kingstown have recently had some modest public works projects completed or nearly completed.  The parking area in front of the Town Hall was changed, traffic pattern was changed etc.  Also the town beach area was modified including construction of a new bandstand.

As I view these projects I find that I have some questions and comments about their design.  While I am not an expert and would not want such projects to require voter approval, I do believe that the public would benefit greatly if the projects were posted for voter review and comments before they are begun. Certain issues might have been overlooked and citizen comments prior to construction might make a significant contribution to the final results. The town would be under no obligation to accept or even consider the suggestions but they would have to be posted along with the images, schedules etc.

Perhaps someone might introduce legislation requiring (non binding) posting such municipal projects (and possibly state projects) with visuals of intended outcomes so the public might have input beforehand and avoid some of the complaints after the fact.

Using the internet the costs would be minimal but the benefits could be very great.

But Maybe It's Just Me