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Why is the RI Budget $33.6 Million in the Hole? September 12, 2008

Posted by truthspew in Uncategorized.
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Something appeared in the local rag which tells a story of why RI is $33.6 million in the hole.

Check this out:
TAX SAVINGS
Each company below received more than $1 million in Rhode Island tax breaks for the year ended June 30.

Name Amount
CVS $17,230,650
Fidelity Investments (FMR Corp.) $10,049,844
Brotherhood Productions* $5,484,600
Bridesmaid Productions* $4,144,901
Hachiko Productions* $3,006,463
UTGR (Twin River) $2,406,595
Bank of America $1,742,621
Total $44,065,674

* Movie/TV production companies
SOURCE: Based on report by R.I. Dept. of Revenue’s Division of Taxation

Tax breaks for business
The R.I. Dept. of Revenue studied six different types of state tax breaks to see which businesses claim them and how much those businesses receive:

Tax Break Summary Number of Recipients Total Amount
Tax rate is reduced a certain amount for every 50 new employees hired. 12 $21 million
Sales tax break for construction of new facilities. 13 $18.2 million
Tax credit for companies that film movies or TV shows in state. 4 12.8 million
Tax credit for business in distressed area “enterprise zone” that hires new employees. 87 $1.8 million
Tax credits as incentives for innovation and growth generally involving science and technology. 4

$300,000
Total $54.1 million

For year ended June 30, 2008
Source: R.I. Dept. of Revenue’s Division of Taxation

Now that you’ve seen the data, let me say a few things.

Should you so desire, you can total up the tax savings and tax breaks to come to a total of about $98 Million dollars. And the state is in the hole a third of that amount.

Next, why the hell do companies like CVS Caremark and Bank of America need tax breaks? Last I looked they haven’t exactly been beneficial to Rhode Island, they just take and take and take.

Then there is the Twin River property. The state through it’s ineptitude managed to completely destroy the economic feasibility of what could have been a premier gambling establishment.

Twin River was once Lincoln Downs. They used to have regular dog races there. Then someone got the bright idea to install Keno machines, then video lottery, then slots, and I’ve heard they now want to add table games.

But RI in it’s greedy grubby little fashion takes almost half the cut of the profit. Any company providing the service is automatically at a disadvantage since they have the debt service and the state gets half the take. A better solution would be to give the Narragansetts management over the facility. Then they get their casino that they want so badly.

The other thing that bugs me in the tax break section is that science and technology gets a measly $300,000 in breaks. If you ask me that chart is upside down in the last column. Leave the left hand columns as is but take the amounts in the right column and flip them upside down. Pump $21 Million or more into Sci/Tech and watch things take off. Providence by its nature is a science and technology incubator. We have vibrant groups like Providence Geeks, DC401, etc. on the computing and electronics front but we need much more. The RI Nexus is a good first step.

One of the problems I see is academia. It needs to step into the 21st century and become the incubator for the next great societal change. And in dealing with academia over my career I’ve found that they have their set way of doing things, and heaven help you if you try to change it.

So instead of growing science and technology we keep pissing away money to big companies and movie and tv production firms. And if one looks at their representative government, you’ll find that we the citizens have no voice in their actions. Instead people who proudly call themselves lobbyists do the bidding of their corporate masters. Personally I’m of the opinion it should be open season on the lobbyists and their corporate masters. We need to send a very clear message to our ELECTED representatives that they will do OUR bidding and not that of a corporate entity which I consider a fraudulent legal entity.

There are many things causing the RI deficit and the prime candidate is tax breaks. And to Governor Carcieri, no it’s not the state employees, and no it’s not the immigrants. Look back inward and see the real problem, unmitigated greed.

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Comments»

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