SBANE members doubt GA fix on structural deficit

Members of the Rhode Island chapter of the Smaller Business Association of New England (SBANE) appear to have more confidence in the Boston Red Sox making it to the World Series this year than they do in the General Assembly’s ability to resolve the state’s economic woes.
According to a survey completed by 80 members of the local chapter during a meeting in early May at the Marriott Providence Downtown, 59 percent said they expect the Red Sox to be in the World Series this year.
Some 24 percent said the Sox would not make it to the World Series, 8 percent were unsure and another 8 percent did not care.
As for the legislature, asked if “the General Assembly [will] make the difficult decisions needed to fix the state’s structural deficit,” only 5 percent agreed. Some 81 percent said the legislature will not be able to make those decisions and 14 percent were unsure.
The state is facing an estimated $590 million deficit for the fiscal year starting July 1, a figure state officials say is approximately 19 percent of all state spending.
Gov. Donald L. Carcieri maintains that options to close next year’s budget gap are becoming increasingly limited due to the many cuts already made in state spending. He has pegged pension reform and reduced aid to municipalities as the two areas where he would like to see savings achieved. Pension reform, under the governor’s proposal, would include eliminating the annual cost-of-living adjustment for pensioners and increasing the eligible age of retirement for state workers, among other things.
In March, Carcieri proposed a $7.62 billion state budget for fiscal 2010 that resolved what then had been estimated as a $504 million deficit. That proposal, which lawmakers have yet to act on, called for the use of millions of dollars in federal stimulus funding, the start of a phase-out for the corporate tax and deep cuts in local aid.
Regarding the SBANE survey, the most surprising result, in terms of its unanimity, came in response to the question: “In light of the growing state budget deficit, should Rhode Island consider raising the state income tax?” All 100 percent said no.
Grafton H. “Cap” Willey IV, chairman of the Rhode Island SBANE chapter and managing director of the accounting firm CBIZ Tofias in Providence, said he has been surveying local SBANE members on a regular basis since the mid 1980s and this was “the first time we have ever had 100 percent on anything.”
Asked if he distributed survey results to the General Assembly, which would make the ultimate decision on tax hikes, Willey said he did send it to one member, whom he declined to name.
The survey was taken during an SBANE meeting when Secretary of State A. Ralph Mollis was the guest speaker, Willey said. Mollis was on hand when the results were announced, so at least one state general officer is aware of SBANE’s collective opinion on raising income taxes.
In light of the state budget deficit, respondents were asked, should Rhode Island consider:
&#8226 Raising or broadening the sales tax basis? Yes, 14 percent; No, 84 percent; Unsure, 2 percent.
&#8226 Raise gas taxes? Yes, 11 percent; No, 84 percent; Unsure, 5 percent.
&#8226 Change the state pension system, including reducing benefits and increasing retirement ages? Yes, 95 percent; No, zero; Unsure, 5 percent.
&#8226 Reducing or eliminating government programs? Yes, 92 percent; No, 5 percent; Unsure, 3 percent.
&#8226 Freezing or reducing aid to cities and towns? Yes, 59 percent; No, 27 percent; Unsure, 14 percent.
Surveys on topical issues are distributed at the start of the SBANE/RI meetings, which Willey said usually are held on the second Wednesday of every month, except for the summer, at the Providence Marriott Downtown on Orms Street. “It’s kind of a fun thing,” he said of the surveys. “It’s not scientific, it’s not meant to be scientific, but it does give you a pulse on what business executives are thinking.” &#8226