CRANSTON—Providence’s Poverty Institute hosted “Budget Rhode Map,” a discussion and lecture event sponsored by local non-profits to discuss the condition of the state and nation’s budget challenges. The conference was attended by various state representatives including Sen. Spencer Dickinson and representatives Teresa Tanzi and Donna Walsh.
The first speaker, Jon Shure, Deputy Director of the Center on Budget and Policy Priorities’ State Fiscal Project presented a discussion titled “The State of State Budgets” and said that “in a perfect world” state leaders would raise the income tax in a time of recession, not the sales tax. The proposed increase in the sales tax would adversely affect the poor who spend more of their income on items that would be taxed. But Shure said that he would still support it if it was the only way to raise revenue.
According to Governor Chafee, the plan would raise $89 million in new revenue that state-funded programs need in order to serve Rhode Islanders. Shure also described how, contrary to popular opinion, states that raised taxes in a recession performed economically better because they made necessary investments.
“We have heard a lot about how you can’t ‘spend your way to prosperity.’ Well, you can’t cut your way to prosperity, either,” Shure said, describing how states with revenue immediately spend it. “States know where to spend the money—it’s not sitting in some Cayman Island account.” But he also encouraged non-profits to not believe the false choice between cutting spending and raising revenues and encouraged them to unite in a “revenue coalition” to avoid the division and antagonism resulting in a search for state funds.
“We are past the point of competing with each other for the crumbs of a shrinking pie,” he said.
He introduced his presentation describing the hardship of state employees whose salaries were frozen and 426,000 of whom lost their jobs since 2008. He also discussed deep budget shortfalls in state and national government.
In the last recession (2002-5) the shortfall never went deeper than $80 billion. The budget shortfall n 2010 was $191 billion. As individuals were laid off, stung by cutbacks, or just squeamish about spending in a troubled economy, they spent less and were consequently taxed less.
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