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Forum addresses fiscal crisis

May 15, 2011

EAST GREENWICH — The diagnoses were dire and the prescriptions painful for addressing Rhode Island’s economic woes at an Operation Clean Government forum on Saturday.
The event featured the brief return of the always colorful and often combative Steven Laffey to Rhode Island’s fiscal and political fray. Laffey, the former mayor of Cranston and 2006 U.S. Senate candidate who has since decamped to a ranch in Fort Collins, Colo., apparently hasn’t learned to mince his words since moving out west.
“It’s over for Providence — Chapter 9 bankruptcy. It’s over for Rhode Island,” Laffey told more than 100 OCG members and others who gathered in the Varnum Armory. “You people, and the people of Rhode Island have to publicly humiliate through the power of ideas your elected officials. There really is no other way.”
The often raucous crowd was loudly in agreement with Laffey’s pronouncements of impending doom and his radical remedies for avoiding it.
Laffey said the state must abruptly end its pension program and write checks to reimburse workers for what they have paid into the system. He said General Treasurer Gina Raimondo, who has undertaken a comprehensive study of the pension system is “pulling a Frank Caprio, you can’t allow someone to run for general treasurer without a plan. You can’t say I’m still working on a plan. That’s not credible. A man from Colorado came in with a complete plan to fix the state. That’s what’s credible.”
Acknowledging that his proposed solutions can be jarring, Laffey said, “if these were normal times, I would say normal things.”
When Moderator Dan Yorke, WPRO talk host, characterized Laffey’s comments as wanting “to take a bazooka and put a blowhole in the side of the Statehouse on Tuesday,” the crowd ate it up, cheering wildly and calling out for the bazooka solution at various times for the rest of the morning.
By contrast, when Rep. Larry Valencia, a panel member and former OCG president suggested bringing concerned parties around a table for a rational discussion, he was roundly hooted at and shouted down by the audience. At one point, audience members yelled for Valencia, just elected last November, to resign from the General Assembly.
Valencia said Laffey’s notion that the general treasurer should march in and declare an end to the pension system is “ridiculous. General Treasurer Raimondo is in no position to dictate to the House” of Representatives.
Part of Rhode Island’s budget problem, said panelist Gary Sasse, director of administration in the Carcieri administration, is that “we are an entitlement state. Thirty-eight cents, nearly 40 cents of every dollar spent” goes to entitlement programs.
Sasse said there are only three ways to solve the state’s $9 billion unfunded pension liability problem: “soaking the taxpayers, if the investment interest returns improve, or you’ve got to deal with costs” by cutting pension benefits. “No politician has the guts to put that on the table.”
Panelist Ed Mazze, former dean of the URI College of Business Administration, suggested a similar lack of fortitude on the part of political leaders in dealing with the state’s budget problem.
“I think they know what to do; many of them don’t have the guts or courage to do it,” Mazze said, adding that Rhode Island has one of the highest unemployment rates in the country as well as one of the highest underemployment rates. “There are no jobs for people graduating from Rhode Island colleges in Rhode Island.”
Mazze said Rhode Island should shrink to “a five-county state with five governments. We need to look ahead at the next five years. We need a much more effective and concerned type of leadership. We can’t live year-to-year and spend 11 months trying to figure out how to pass this budget” then do the same thing next year.
He said the way local and state government is configured “doesn’t work in 2011.”
At one point, Laffey got into a verbal back-and-forth with Sen. James Sheehan, Laffey accused Sheehan of talking about problems but offering “no solutions.” Laffey said Sheehan “is a perfect politician on this topic.” It was not meant as a compliment. Sheehan raced back to the lectern and angrily called Laffey “egomaniacal” and “a bomb-thrower.” As Sheehan left the room he was followed by catcalls and insults from the crowd.
Sasse told Yorke that Rhode Island’s “big problem” is “very simple. State spending grows quicker than income, grows quicker than inflation, is unsustainable. The governor has come out and balanced the budget with taxes and one-time gimmicks. Spending shouldn’t grow faster than the income of Rhode Islanders. The proposed budget grows by 7.7 percent, income is growing at 2.2 percent, that’s not sustainable.
As he has in the past, Sasse recommended $2 in budget cuts for every $1 increase in taxes.

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