We know that whenever Rhode Island hits hard budgetary times, policymakers cut state spending for programs that help low-income and modest-income Rhode Islanders. Yet when we are flush with money, policymakers give tax cuts that favor the wealthy while leaving these programs starved of state funding.
Instead of cutting taxes, now is the time to reverse spending cuts and reinvest in the programs and services state lawmakers have long neglected, yet are vital to the well-being, safety, and economic security of hundreds of thousands of Rhode Islanders. Doing so, including improving wages for invaluable care economy workers and rebuilding the community programs that employ them, would help our residents who need it most, generating broad economic opportunity and strengthening the state’s economy.
In 2007, the state reduced its investment in subsidized child care assistance, rolling back families’ eligibility for assistance and limiting rates paid to child care providers. Since then, we’ve spent only the bare minimum from the state’s general revenue funds on this critical service. Today, we are spending $47.5 million less on child care than we did in 2005.
Policymakers have also failed for decades to invest adequately in programs that support adults and children with developmental disabilities and behavioral health needs. Payments to workers providing care for seniors and people with disabilities have not kept pace with rising costs.
Hundreds of Rhode Islanders have made their way to the statehouse to share the real-world impacts of the current crises. They are demanding investments in behavioral health care, child care and early learning, home- and community-based services, and support for children enrolled in RI Works.
According to the most recently reported numbers, Rhode Island can expect to end Fiscal Year 2022 with an $878 million budget surplus and bring in another $193 million more than previously estimated for Fiscal Year 2023. Despite this surplus, now is not the time to spend more on tax cuts that benefit the wealthy more than they do those in the most financial distress.
Accelerating the car tax phase-out, which would cost over $60 million in 2023, will give residents with the most expensive cars the most money back. Meanwhile, residents without cars, who tend to have the lowest incomes, will not benefit at all.
The gas tax cut would also fail to meet the needs of Rhode Island’s most vulnerable communities. That’s because the gas tax is collected from the distributor – not from consumers at the pump. So there is no guarantee that consumers would receive the tax cut, which would also mean a drop in revenue for programs to fix our roads and bridges. Again, those without cars would not benefit.
A sales tax cut is likely to benefit most those residents who least need it: those who have the disposable cash to purchase expensive items. The tax cut could also benefit out-of-state retailers – not just our own small businesses. Residents with low incomes already benefit more from the exemption of the sales tax on food and most clothing.
If there’s going to be any tax relief, the state’s refundable Earned Income Tax Credit is the best way to help low-paid workers and making our tax system more equitable. Lawmakers can increase the EITC from its current 15% of the federal credit to a rate comparable to those in other New England states: 20 percent in Maine, 30 percent in Massachusetts, 30.5 percent in Connecticut, and 36 percent in Vermont.
In taking the opportunity to reinvest in critical yet neglected programs and services, policymakers must also do a better job ensuring that racial, ethnic, and gender equity are centered and must focus on the neighborhoods that policymakers have traditionally ignored. Policymakers also need to develop means of raising revenue to sustain these critical programs and services over time. We cannot have another cycle of neglect addressed only after it has become a crisis.
Alan Krinsky is a Senior Fiscal Policy Analyst with the nonpartisan and nonprofit Economic Progress Institute, located in Providence, R.I.