1/24/08

Unions push labor-state to tipping point

“Our state is at a tipping point,” Gov. Donald L. Carcieri said in his sixth annual State of the State address, presented in the House Chamber last night before a joint session of the R.I. General Assembly.

“It is teetering, ready to move dramatically in one direction or another. All of Rhode Island’s virtues, all of its assets, all of Rhode Island’s bright promises are overshadowed – and, in fact, threatened – by the budget crisis we face. It’s the 800-pound gorilla in the room.”

For the fiscal year that ends this June, and the next, “we are staring at a combined $550 million deficit.” But, Carcieri said, the taxpayers already are struggling to meet higher prices for food, heat, gasoline, health care and housing. “The last thing they need is rising taxes!”

Therefore, the governor said, “I am proposing a budget for the remainder of this year, and all of next year, that will reduce spending by $300 million. This will result in a fiscal ’09 that is less than the previous year’s – the first time since the credit union crisis. All state employees, all state vendors, contractors and providers, and all municipalities will be affected.”

Carcieri said he is proposing cuts in each of the three major categories of state spending: personnel expenses, including wages, health care costs and pensions; welfare, social service and entitlement programs; and local aid for school and other services.

• Of personnel costs, he said: “The average state employee earns $61,000 per year in salary, with fringe benefits valued at another $34,000 (a total of $95,000), [for] a 35-hour work week. Bringing the health care, pension benefits and work week into line with the private sector could save the state tens of millions per year. This will be the focal point of our contract negotiation with labor leadership.” Carcieri specifically cited “the state’s overly generous retiree health plan.”

To achieve further savings, he also suggested the privatization of some state services. “The barriers to competition, such as the anti-privatization statute passed last session, must be taken down.”

• Of social service programs, he said: “Our current social service system is badly broken …. [It] perpetuates dependency and strips individuals of their ability to make reasoned and responsible choices.”

For instance, the governor said, supporting long-term home care for seniors would not only “result in greater longevity and improved quality of life – in fact, it is less costly.” Yet, he said, “5.2 percent of Rhode Island seniors are in nursing homes, more than twice the rate of leading states.” So next week, Carcieri said, he will propose a “fundamental reform” that “will transform the state’s Medicaid program – the state/federal partnership that provides health care to the needy – from one centered on institutions and agencies to a system that focuses on the people who use it.”

In addition, he said, the state currently “has one of the poorest records in the country for getting people off welfare and into the work force.” So along with the new budget, “we will introduce Rhode Island’s Work First Program … to accelerate movement out of poverty.” The program will require an immediate employment plan for all participants and limit support too a maximum of two years.

• Of municipal aid, he said: “We need our cities and towns to undertake the same kinds of personnel, health care and pension reforms that state government is advancing.”

To help the cities and towns, the governor said, he will propose legislation that would allow a single umbrella health-care contract for all state, municipal and school employees. “This will save tens of millions of dollars for property taxpayers by creating competitive bidding by the health insurers.”

“In addition, we need for our cities and towns to look aggressively at consolidating services and reducing overhead,” Carcieri said. “Rhode Island municipal cost for fire protection is first in the nation, and its cost for police protection is 10th. … Municipalities need to look at ways to share these services and save money.”

Yet, he noted, the largest expense for Rhode Island communities is their public schools – another area where he hinted at the possibility of consolidation.

“In Rhode Island, we have 36 school departments overseeing 150,000 students,” Carcieri said. By comparison, “the County of Fairfax, Va., with the same student population, has one. “I have asked RIPEC to evaluate various options, and to project the statewide savings to the taxpayers. This will provide the data we need for real action.”

“Everyone must be part of this plan,” the governor told his State House audience. “We may be Republicans, Democrats or Independents,” he said, “but we are all Rhode Islanders, and we’re here because we love our state. To fix this problem, it will take all of us in this room working together.”

In a response last night, House Majority Leader Gordon D. Fox said “We are a state of great potential – but there is no avoiding the dire fiscal crisis that we are facing this year and in years to come. … We are going to have to make some very difficult decisions. But these decisions must be informed.”

He praised the concept of consolidation of services. But he criticized some aspects of the governor’s budget plan – such as a proposal to raise $5 million in a year by banning cell phone use while driving, a sum Fox said would require ticketing 10 percent of all Rhode Islanders – as “just not realistic.”

“Budget decisions must be based on facts,” Senate Majority Leader Teresa Paiva-Weed said in a separate statement. “The proposed supplemental budget includes eliminating health benefits for 9,000 women and children.” RIte Care, she said, “is a highly cost-effective program. In examining necessary Medicaid cuts we cannot simply shift costs to our health centers and hospitals. Our priority should be to keep people out of emergency rooms for routine care, and support them at home for long-term care.”

But, she added, “Accountability and efficiency will be a critical part of any proposal. The Senate is holding hearings next week to review the efforts currently being made by the state’s five regional collaboratives to determine if they can be building blocks for increased collaboration among our school districts.”

(pbn.com)

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