WE’RE WORST IN NATION FOR UNEMPLOYMENT TAX: Add this to a seemingly never-ending set of bad lists that include Rhode Island as the worst or near the worst in the nation. Our unemployment compensation tax, paid by all employers to finance payments to laid off workers, is the highest in the country. Still, our state is so far in the hole that it has to borrow from the federal government to make unemployment compensation payments – to the tune of $717 million in borrowing since 2009.
So, what’s the problem? Why, with our exorbitant tax rate, doesn’t Rhode Island have enough money to pay laid off workers without having to borrow? The answer: we allow seasonal workers to collect unemployment throughout their off-season. This applies primarily to construction workers who are laid off every year for several weeks or months during the coldest part of the year when construction slows to a virtual standstill. Since 2009, these companies have paid into the unemployment system $138 million in taxes while their laid off employees received $309 million in unemployment compensation benefits. And who has made up the difference of over $170 million? It’s the higher than necessary taxes paid by other companies who do not lay off employees every year. Construction companies are using the system as a financing tool for their employees to take what is, in essence, a paid vacation every year at the expense of non-construction companies.
Representative Patricia Morgan submitted a bill to limit unemployment benefits for the lay-off of seasonal industry workers to those laid off during the industry’s work season. Those laid off during the off-season would not qualify for unemployment compensation. This would cause the unemployment compensation taxes paid by other businesses to go down since they would no longer have to subsidize the construction industry. This is exactly what happens in our school districts with teachers who are off for the summer. They do not collect unemployment compensation during this seasonal lack of work period.
We’ve made the business climate in Rhode Island unattractive enough. Let’s fix this tax problem and get us off at least one “worst in the nation” list.
RHODE ISLANDERS LAZIEST? Speaking of lists that have Rhode Island as the worst in the nation, yet another came out this week. A Gallup survey of workers across the country determined that only about 30 percent of U.S. workers are committed to their work and actively engaged in helping their companies succeed. About 50 percent are “not engaged” and just go through the motions at work. Another 20 percent are “actively disengaged,” hate their jobs and undermine their companies with their attitude. And where are Ocean State workers? Where else but at the top of the list! More of our workers hate their jobs and undermine their employers than do workers in any other state. While the national average in this category is 20 percent, we are at the top of the list at 27.7 percent.
This “top of the list” problem has become a disease for Rhode Island that has to be cured. If businesses in our state didn’t have to fight so hard just to survive our onerous taxes and regulations, perhaps they could offer more amenities in the workplace and increase employee happiness.
NATIONAL POPULAR VOTE COMPACT: Rhode Island’s legislature has passed bills that will likely lead to our signing up to the National Popular Vote compact, a move that would require our state to award its electoral college votes to the presidential candidate who receives the most votes nationwide. The multi-state compact is supposed to guarantee no presidential candidate can win the office without winning the nation’s popular vote. Once enough states join the compact so their combined electoral votes equal at least 136, the Constitution’s Electoral College clause will become obsolete and the candidate who wins the popular vote will always become president.
So, what’s the problem with this? First, though it’s probably not unconstitutional, it’s certainly an end-run around the Constitution. We have enough arguably unconstitutional actions being taken by our government already; we don’t need more “shortcutting” of our founding document. Second, while the compact will achieve its intended purpose, it does so in a highly unfair way. If a state’s citizens vote overwhelmingly in favor of the candidate who loses the national popular vote, the state’s electoral college votes will go to the other candidate – the one the state’s citizens rejected. Third, the compact will not cause presidential candidates to campaign nationwide as proponents claim. Instead of campaigning mostly in 8 to 10 swing states, the compact would cause presidential candidates to shift their focus to the 8 to 10 large states with large urban centers. Small states, especially those with vast rural areas and those with solid blue or red voting histories, will still be shortchanged in presidential campaigning. Nothing will change.
What’s the solution? States should follow the examples set by Nebraska and Maine and split their electoral votes to match how their citizens voted. If 75 percent of Rhode Islanders voted for the Democratic candidate and 25 percent for the Republican, then three of our Electoral College votes would go to the Democrat and one to the Republican. This system would cause presidential candidates to campaign nationwide, would be fair to every state’s voters and would make it virtually impossible for a candidate to become president without winning the nation’s popular vote.
APPEALS COURT HALTS FORECLOSURE INJUSTICE: Rhode Island Federal Judge John J. McConnell Jr. issued an order in 2011 that forced Rhode Island banks and other lending institutions to halt foreclosure proceedings against homeowners who had failed to pay their mortgages for months and years. McConnell ordered lenders instead to “engage in directed and serious settlement discussions.” McConnell apparently decided that he could usurp the legal system and make businesses with solid claims against defaulting borrowers drop their cases in favor of the delinquent borrowers.
The appeals court told Judge McConnell that he could not arbitrarily force plaintiffs to give up their rights to the judicial process; that such an order constituted an improper injunction.
It is unfortunate that so many homeowners pursued mortgage loans they could not afford. And, it is unfortunate that some lending institutions were too lax in their responsibility to ensure borrowers could afford hefty mortgage payments. Much of the blame goes to the federal government, especially to former Massachusetts Congressman Barney Frank, for issuing dictates to banks that forced more mortgage loans to low-income, high-risk borrowers. Thankfully, the appeals court realizes that the rule of law cannot be subverted in the name of social experimentation as Judge McConnell obviously thinks.
THE COST OF STUPIDITY? Governor Chafee has now decided to refer one of his more memorably illogical bills to a “study” instead of pursuing its passage in the General Assembly. The bill would have mandated that National Grid import a certain amount of hydropower from Canada, a move opposed by environmentalists and the business community alike because it would reduce the amount of renewable energy produced locally and would remove National Grid’s negotiating leverage when it deals with power purchases from Canada – thus, causing our rates to increase.
This is a common move whenever a governor or other powerful political figure wants to drop a stupid proposal. Referring an issue to study allows the politician to save face a bit in lieu of just abandoning an illogical or overly costly proposition. The open issue, however, is just how much do all of these totally unnecessary “studies” cost our taxpayers?
QUOTE OF THE WEEK: Former Rhode Island Supreme Court Justice Stephen Fortunato Jr., in a commentary piece for the Providence Journal last Sunday, talked about how our government’s surveillance of law-abiding Americans would repel our Founding Fathers. He spoke of the Obama administration and its allies in Congress trying to convince us that such surveillance is necessary to prevent terrorist attacks. Yet, the evidence presented by Justice Fortunato shows just the opposite. His quote: “An American has a one in 20 million chance of being killed in a terrorist attack in a 12-month period ... there is a one in 118,000 chance of dying from post-operative complications and a one in 10,000 chance of dying in a car accident.” Are we really willing to give up our freedom from pervasive government intrusions for so little in security benefits?