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Thursday, February 10, 2011

In Rhode Island, Nothing Succeeds Like Failure

I have posted here many times about my quirky home State of Rhode Island and Providence Plantations, particularly the union-controlled legislature, deficit-ridden municipalities, and Democratic hegemony:
Thanks to readers Tom and James for each e-mailing me a link to this article by Steve Malanga, Rhode Island: A Fiscal Mess Few Care About, which pretty nicely sums up the situation:
Though smaller than its neighbors, Rhode Island very much bears the stamp of Northeastern politics and governing. It has the third highest level of public employee unionization in the country, 64 percent, behind New York and Connecticut. Its government is among the top 10 in the nation in per capita spending and in the tax burden it imposes on residents, plus the state has one of the least attractive business environments, according to the Tax Foundation.

Rhode Island's long-term obligations compare unfavorably with just about any other state, and that's saying a lot. An evaluation of state finances by the Daily Beast recently ranked Rhode Island the state most likely to go bust because of the combination of its budget deficit, outstanding debt and unfunded pension liabilities relative to economic capacity. Moody's, which recently issued a report on combined municipal debt and outstanding pension obligations for the states, ranked Rhode Island among the most troubled states on a variety of metrics, including combined liabilities as a percent of GDP and as a percent of state revenues.
While none of this is news to readers of this blog, there was a section of Malanga's article which was news to me (emphasis mine):
The state's spendthrift political culture infects its local governments. A recent audit revealed that Rhode Island's biggest city, Providence, has been spending more than it budgets throughout the recession and depleting its reserve funds in the process, to the point where the city is almost out of cash. Last year alone the city overspent its budget by $13.9 million, bringing its reserve down to just $3.5 million, barely one-tenth of where it should be. The city council has approved borrowing some $48 million this year to cover its deficit.
I don't think the voters of Providence will attempt to hold the Mayor of Providence during this time period, David Cicilline, responsible for the fact that Providence is almost out of cash.  That's because Cicilline no longer is mayor, and is unlikely to run again.

You see, Rhode Island's 1st District voters rewarded Cicilline with a promotion.  To the United States Congress:

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  1. I was just about to add the following comment to your Known Unknowns post but it seems more appropriate here.

    There's been much discussion about the prospect of municipalities and states failing individually but almost none about the gruesome details of what will occur in the effected states. Even worse is the possibility (likelihood?) of a cumulative or domino/panic effect on the national economy. Despite state constitutions guaranteeing government pensions and retirees health care plans, at some point, reality will kick in and defaults will begin. This could be one of the most threatening known unknowns on we're facing.

  2. We need add something to the "known knowns, known unknowns" meme: "don't care". The pols have known for over a decade that the spending and pensions are out of control and will go bust, they simply do not care. Most pols are older and figure they'll be retired or dead before the bill comes due, so, why care. It gets them votes and campaign dollars now. And for too many, now is all that counts.

  3. Rhode Island. Isn't that the dividing line between the Irish mob in Boston and the Italians in New York? (I kid, I kid)

    Really though, I've always thought that Rhode Island was where the Kennedys and other assorted gentrified hoodlums got their training in legalized intimidation and theft then went back to Boston to put it in practice.

    I've never understood how certain people convince "Rhodies" to vote for them and why they do.

    I don't really have room to talk as my original home state (Indiana) is infested with the "Chicago Way" style of politics and in some cases (like Gary, Hammond, East Chicago et al) have actual ties to the Chicago political machine. Not to mention it is/was a favorite 'dumping ground' for assorted individuals that the mob didn't want running around loose. (Those sand dunes are really easy to dig in. IYKWIMAITTYD)

  4. I'm no expert on RI, but I can report that a close New England acquaintance mentioned to me in passing long ago that mob capi make their homes in RI. I have no reason to doubt his word or consider it misdirection. Nor have I direct knowledge of specific implications of said domiciles concentrating in RI. However, my acquaintance's comment predisposes me to credit these reports and posit their cause.