Ocean State needs to make tough choices

President Barack Obama has finally gotten his economic stimulus package through Congress. The numbers are staggering. At $789 billion, it is the largest spending bill ever enacted. The question is: Will it work? The answer? No one knows.
Rhode Island has been staring down the barrel of a deepening recession for more than a year. With increasing unemployment, mounting foreclosures and an exploding budget deficit, our leaders face problems that require difficult decisions.
The federal bailout will help, but the fear is that federal funds will be used to fill holes in the budget and that critical decisions to address Rhode Island’s structural problems will again be avoided, postponed or left to mushroom. We have a long history of using one-time windfalls to plug short-term operating deficits. Take for example, the tobacco settlement funds that could have been invested in the long-term future of Rhode Island. Hopefully we will be smarter this time.
Fix the structural deficit. In eight of the last 10 years in Rhode Island, government spending has outpaced growth of the Consumer Price Index and personal income by substantial margins. The ever-increasing shortfalls that have been incurred each year are unsustainable. While current revenue shortfalls are due to the recession, our real problem is that we spend more than we can fund. We desperately need to control spending and make the tough decisions that will change the way we pay for and provide government services. This includes addressing employee labor contracts, pensions, benefits, work rules and a serious look at regionalization solutions.
It is tempting for legislators to plug the budget gaps with this found money and worry about the repercussions later. This approach allows them to dodge special-interest groups complaining about program cuts and to save face with constituents. But potentially two year’s worth of federal funding means we have got about two years to get our act together. If we avoid cutting programs that we can’t afford today, how will we pay for them two years from now when we have exhausted federal bailout money and those programs cost even more? And worse than funding programs that we cannot afford is using bailout money to create programs that require future funding. Both scenarios are big mistakes we have been prone to in the past. Many experts predict that we will never return to the high-consumption, free-spending economy of the past two decades. Just as consumers will have to adapt to the new economy, state and municipal governments also must find ways to live within their means. To do that, it is imperative that we address these issues without delay.
In the last recession, Rhode Island did not move quickly enough to reinvent itself, and we are paying dearly now. Neighbors Massachusetts and Connecticut were much better than Rhode Island at building a robust economy, and while both have been suffering, Rhode Island’s pain is much greater. We must commit to emerging from this recession lean, mean and ready for the challenges that await us in the new economy, positioning ourselves for success in the upturn.
Make smart investment decisions. The purpose of economic stimulus is to invest in our ability to recover successfully. Therefore, a substantial amount of money is designated for infrastructure investments in various states. The intent is to put people to work quickly, hence the call for “shovel-ready projects” that went out on both a federal and state level. Yet most of the funding in this massive bill is not “stimulus,” and in another time and place would have been labeled pork-barrel earmarks for special interests. Many states moved quickly on this and began lining up “stimulus” projects, but from all indications, Rhode Island has not given this as much thought and has been scurrying around to find ways to use this money. Let’s not spend money for the sake of spending money. It is not as though it doesn’t have to be paid back someday, albeit by our children and grandchildren.
If we spend money on stimulus projects, make them true stimulus projects that create not only current jobs but future jobs. Make investments that will improve our economy and provide a better business climate. Some easy examples:
• Fix the Pawtucket Interstate 95 overpass so that commercial traffic can avoid extensive detours due to weight limits.
• Build the Sakonnet River Bridge, for the same reasons.
• Build a world-class airport in Warwick, seizing the opportunity to make Providence [T.F. Green Airport (PVD)] a gateway location with the airport-train connections. House Seaker William J. Murphy echoed these thoughts recently.
• Make Quonset Point an economic powerhouse.
• Commit to alternative energy.
To bring Rhode Island out of the economic doldrums is going to take leadership at every level of state and local government. Unpopular decisions must be made and some people may pay the price at the ballot box, but we need leaders with vision and courage. I hope that they rise to the occasion. •

Grafton H. “Cap” Willey IV (willeycap@cbiztofias.com) is a managing director at CBIZ Tofias and a shareholder at Mayer Hoffman McCann P.C.—Tofias New England Division. Offices nationwide include Newport, Providence, Cambridge and New Bedford.

PBN Branded Content

Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.

By Emilio DiSpirito IV License Partner | Engel & Völkers Oceanside Leader | The DiSpirito…

Learn More