Melissa
4/15/2015
WRT 303
Project Three Draft
Rhode Island: Economic Comeback or Bankruptcy Downfall?
Every morning Julie wakes up in her small, old house. She gets into her car,
which creaks and fights back when she tries to open the tired door. She drives to
her first job and works until 4:00 p.m. After a long day of work, she comes home,
prepares dinner for her children while they do homework, and then calls it an early
night for a few hours until she gets up to work her night job. There, she goes from
11:00 p.m. to 7:00 a.m. She then comes home and sleeps for just a few minutes until
it’s time to get ready and go to work for 9:00 a.m. once again. Unfortunately, money
is so tight, the nights she has time to try and catch up on sleep, she ends up spending
most of the night tossing and turning, wondering if her family will end up on the
street again.
Rhode Island is currently ranked 47th in highest unemployment (US Chamber
of Commerce), with one in six individuals relying on food stamps. So, Julie is not in
the minority, but she is accompanied by a little over 175,000 citizens. For a state of
just over a million in population, that is a lot of people. Needless to say, Rhode
Island is in an economic downward spiral that, left unchanged, some would say is
doomed to bankruptcy. So how could our politicians possibly not handle this issue
immediately? Well, that may be harder than one realizes. This is often a topic that
is not addressed. While the social issues are the easiest to get all riled up about, the
budget is the one issue that affects everyone. It is one that the general population
must focus on if they want to see this state thrive once again.
Rhode Island has not always been in this compromising position. Having
been one of the original states created, it went through a transition from
dependence on trade and farming to industrialization. It also was a state known for
its progressive thought and true allowance for freedom of religion. It was known for
its advancements due to the Dorr War and the Bloodless Revolution. It had a
thriving people and a constant money flow. Its economy was one of the highest.
Unfortunately, this did not last.
Unlike other states, Rhode Island had neither the manpower nor the ability
to keep up with industrialization. Thus, over time the state’s economy has gone
down. Its intelligent Democrats, who were able to change the course of leadership
during the Bloodless Revolution, have a stagnant policy. This “no party” state has
little new ideas and the same growing problems, leaving the people to feel that they
do not have much hope of gaining a prosperous state.
Now, Gina Raimondo steps up to bat seriously in the hole, and just like any
baseball player will tell you, the first thing you have to do when you’re in the hole is
to “stop the bleeding”. Although being this far down would deter even the best
players, she can be applauded for her positive efforts to try to take the economy off
of life support.
Gina Raimondo grew up in an Italian-American home in Smithfield, Rhode
Island. She has an impressive background, having received degrees from Harvard,
Oxford and Yale. She invested in Rhode Island and helped start up multiple
companies. In 2009, she turned her focus to politics. She became Rhode Island’s
General Treasurer. There, she was faced with what one could call a pre-test for the
budget: pension reform. Doing the best she could, she proposed a controversial
reform which is still in negations today. Now, she steps up to try and take Rhode
Island to a prosperous place. (http://www.ginaraimondo.com/about).
Gov. Raimondo went about her budget proposal in a wise way. Shortly
before she proposed the budget, her office released a PowerPoint that paints a grim,
realistic picture of Rhode Island’s economic state. This offered the public an
opportunity to have an understanding of where Rhode Island stands and gave some
background and reasoning for her new budget. Although, as is always the case with
biased reports, her numbers do have some unfair comparisons, for the most part
they check out. This strategy was very effective, as she was about to propose some
harsh policy and fiscal changes. Also, the Governor was smart in her sequence of
changes. For the most part, she has been proposing the least liked changes first.
This way, by the time re-election comes around, she can hope that the people will
forget their initial reactions and think only of the benefits the changes created.
Governor Raimondo’s budget can be broken down into 5 components. They
are: Build Skills, Attract, Innovate, Opportunity and Fiscal Responsibility
(governor.ri.gov). These components have subcategories involving plans to grow
jobs and properly educate children and young adults in trade skills. It also offers
investment and breaks for businesses in hopes of attracting them to the state. The
proposed budget also looks at trying to rethink Medicaid to ensure that those who
need it get it, and to penalize those who abuse the system. She plans to raise the
minimum wage to $10.00 in the hope of helping struggling families, and to increase
state provided services like Meals on Wheels. To sum it all up, her budget attacks
the deficit by restructuring programs like Medicaid, reducing personal expenses,
and promoting business growth (governor.ri.com). To see the full outline, you can
visit its direct link
(http://www.governor.ri.gov/documents/budget/highlights.pdf).
(Image taken from governor.ri.gov)
So, to any sensible citizen this sounds like all great ideas. How can it be, then,
that people like the Speaker of the House have strong distrust already in this new
Governor? Well, to figure it out, I went to the Speaker of the House myself. When I
met with him, he was on a tight schedule, so I was not able to meet with him for very
long. I asked him if he approved of the budget, and if he could share his thoughts.
His response was very diplomatic. He explained that he was having his finance team
comb through the budget. He also said that he wants to make sure that Rhode
Island never sees another 38 Studios again, no matter how well intentioned. For me,
that was an indication that Raimondo’s budget will see some major changes from
the Speaker.
In questioning local people on the proposed budget, there are mixed views.
For the most part, issues like the budget don’t cross the mind of the average young
citizen. The elderly and the wealthy tend to be the most invested in the outcome of
the budget. This makes sense, as they realize the stakes involved. With that said,
the lack of knowledge of the budget by the average citizen is concerning. Many
people are not happy with Raimondo’s pension solution, as it negatively affected
their pension, so they are hesitant with Raimondo’s budget. “The Governor
destroyed my pension, and for that I am unhappy with her,” said Lorie, who is a
state employee. Others seem to care less about the budget and were more
concerned about who was going to win the Final Four than how the state will spend
their money.
Professor Shanna Pearson-Merkowitz is a Political Science professor at the
University of Rhode Island. During her research, grant writings, and experience as a
legislative aid, she has spent a lot of time studying the general concept of state and
local governments. She explained to me that Rhode Island is seeing serious
economies of scale and diseconomies of scale, which causes problems. To add to
that, Rhode Island is asked to provide the same services as other states even though
it has much less ability to increase revenues. It struggles with redistributing funds.
The state has little interest in manufacturing and not enough people to work in new
manufacturing businesses. She explained that the state pays little attention to
ensuring that Rhode Islanders get a college education, and it spends money on
drawing in out-of-state students to gain revenue for the colleges. Once those
students finish their degrees, most leave the state. Thus, the state doesn’t even
benefit from having highly qualified workers to offer to new businesses. She also
explained that while the Governor of Rhode Island has little power, the leadership
(within the statehouse) has an exuberant amount of power. The power truly does
lie outside of the population. To add to this, due to the lack of a two party state, the
dynamics of the legislature is unique. Legislators are often called DINOs (Democrat
In Name Only), as they often have policies that are mixed. “This is not to say the
representatives are not consistent to their constituents; it is to say that they can do
that and still not represent the whole state” Pearson-Merkowitz said. Those who
have the power to make legislation often are only representing a small part of the
state, not the majority. Bottom line: the main thing the Governor’s budget is
missing is long term fixes. The short term may work for now, but long term
solutions are needed most.
Professor Pearson-Merkowitz laid out a bleak situation for the state and an
even bleaker hope in Gov. Raimondo’s budget. She believes that in order to fix this
state, the focus must first be on education reform. She also believes that this means
increasing funding for CCRI and RIC (two of the state schools). She thinks that this
focus, combined with redesigning how education is taught, will increase workability
for the people and draw businesses to Rhode Island. She also believes there must be
some willingness to raise taxes in order to maintain education reform.
As mentioned before, because discussing the budget can be daunting, it’s no
wonder that legislators struggle so hard to fix it. Not only are their hands tied, but
the kinds of reforms truly needed are the ones least popular with the public. Public
awareness is crucial at this point, because in order to truly revive this state, the
legislators need to make some tough changes. However, there is some hope in all of
this. If there is a combination of public understanding and long term reforms,
Rhode Island can become the thriving state that it once was. It will require hard
work on everyone’s part and a tough few years. But once we reach the other side,
its payoff will outweigh the downsides. This is nothing new. But the big question is,
how innovative are the proposals?
Rhode Island is a beautiful state, and the people are in an ideal place now to
renew its economy. The question is, just how will they do it?
References:
"About Gina." Gina Raimondo for RI. N.p., 05 Sept. 2013. Web. 14 Apr. 2015.
"| Budget." Interactive Budget. N.p., n.d. Web. 14 Apr. 2015.
"Home- Rhode Island -Office of the Governor." Home- Rhode Island -Office of the
Governor. N.p., n.d. Web. 14 Apr. 2015.
"U.S. Chamber of Commerce." U.S. Chamber of Commerce. N.p., n.d. Web. 14 Apr.
2015.