Can't just keep hiking taxes -- A Rhode Island that citizens can afford
June 8, 2006 | Print this page | Share This | Email this page
Governor Donald L. Carcieri
Earlier this year, I proposed to the Rhode Island General Assembly a state budget designed to control state spending and hold the line on taxes, while making strategic investments in Rhode Island's future prosperity. By limiting the growth in state spending to 3.3 percent and by laying the foundation for tax cuts, my budget plan is focused on making the state affordable for the average Rhode Islander.
Unfortunately, Rhode Islanders can no longer afford the state government that has evolved over the last decade. Throughout this period, state-government spending -- and the taxes needed to fund that spending -- have grown at an unsustainable rate. And Rhode Islanders are feeling the pinch.
The facts are clear. State general-revenue spending has gone from $1.7 billion in 1996 to an estimated $3.1 billion this year -- up $1.4 billion, or 83 percent! That's an average increase of 8.3 percent each year. By contrast, inflation has risen at an average 2.9-percent annual rate during this period. We have been increasing spending by almost three times the rate of inflation.
That rate is totally unacceptable, and I am determined to reduce it to a level that average Rhode Islanders can afford.
While state spending continues to skyrocket, the incomes of Rhode Island families are rising at 4 to 5 percent a year. Unfortunately, this personal-income growth is falling behind the spiraling costs of essential family needs. In recent years, Rhode Island families have seen their health-care costs rise an average 10 percent a year and their property-tax bills increase by 5 percent annually. On top of that, utility costs are increasing by over 13 percent and gasoline prices have jumped by more than 25 percent.
As a result, average Rhode Island families are feeling the squeeze, and have had to adjust their spending. The state must do the same! Like Rhode Island's families, their state government must begin to live within its means. We cannot continue to shift the burden of ever-higher spending onto our citizens through ever-higher taxes.
Thus, I have asked all state departments to limit their spending increases so that state spending is in line with anticipated revenues. I refuse to ask taxpayers to pay more when I know the pressure they are feeling. While the budget required to reduce spending growth to 3.3 percent is not an easy one, it is necessary if we are to give taxpayers a break.
My administration has worked hard to save money for taxpayers so that we could reduce spending growth and lay the foundation for tax cuts. During that time, we have saved hundreds of millions of dollars for citizens.
For instance, our highly successful Fiscal Fitness/Big Audit program is saving taxpayers $100 million a year, through innovative management, consolidation and smarter purchasing. With the General Assembly's approval, we can save another $23 million a year on top of that.
We re-negotiated the state's health-care contract for state employees, saving $25 million over three years, compared with our old contract with Blue Cross. Through extensive union-contract negotiations, we implemented a co-share of health-care premiums for state employees, saving another $15 million a year. Last year, we reformed the state pension plan, saving $44 million a year. And we are operating state government with more than 400 fewer people than when I took office, saving $30 million a year.
While we've achieved much in our efforts to reduce unnecessary government spending, we still have more to do. Holding the growth in state spending to 3.3 percent next year -- and ultimately reducing state taxes -- required us to identify over $200 million in additional savings. These savings are spread across every department and agency of state government.
I have also proposed reforms in the state personnel system and in our social-service system, such as the welfare-to-work program. I do not propose any of these reductions lightly. And I am keenly aware of their impacts on the individuals who depend on the hundreds of millions of dollars in social-welfare services that state government provides each year. Where we have been able to mitigate the impact of these reductions, we have done so. For example, the news of unanticipated federal funds has let me restore proposed cutbacks in day services for our disabled community.
The bottom line, however, is simple: Rhode Island families simply cannot afford to pay higher taxes. The burden of property taxes, sales taxes and income taxes is already too high. My goal is to set our state on a long-term path to sustainable, balanced budgets: budgets that can grow at a rate commensurate with our citizens' growth in income. That is the basis for an affordable state government.
My budget proposal required difficult choices and important sacrifices. But constraining the growth in state spending to a sustainable level is the only way to reduce the burden on average Rhode Island families. My administration stands ready to work with the General Assembly to enact a responsible budget that serves the long-term needs of the Rhode Islanders who are paying the bills.
Donald L. Carcieri is governor of Rhode Island.
Originally appeared in the Providence Journal, June 8, 2006