Once-clotted roads are clear, theaters and stadiums are dark and restaurants and taverns are shuttered. The flashing video slot machines at casinos have stopped blinking. Workers are losing jobs in record numbers. That means taxes on sales, incomes and gambling --which pay to school the children,keep the peace and heal the sick --are cratering. Soon lawmakers on Beacon Hill and Smith Hill will have to grapple with this river of red ink.
Massachusetts is in better shape than Rhode Island. With its stronger economy and $3.5 billion rainy day budget fund, Massachusetts is poised to weather the downturn.
Rhode Island Gov. Gina Raimondo is drawing fine reviews for her daily televised news briefings that have kept the state calmly well-informed. Now comes the tough part.The $10 billion budget she sent to the General Assembly was precariously balanced. The state’s rainy day fund is only about $200 million.The revenue losses are mounting. Just one example: Every day the casinos are locked up costs about $1 million in state money.
No one knows how long this will last. There is no precedent for the economic fallout of this virus.
Yet, other financial crashes have infected state governments. Run the reel back to 1991 when the Credit Union crisis slammed a Rhode Island government already struggling with a recession Then-Gov. Bruce Sundlun took some extraordinary measures, including budget cuts, state employee layoffs and furloughs. He also raised taxes.
It was a disaster for small businesses and everyday citizens; at one point a third of the state’s households had no access to money frozen in bank accounts. Then came the 2008 Wall Street crash and recession. Massachusetts and Rhode Island took different paths. Rhode Island Republican Gov. Don Carcieri slashed state spending on education and aid to cities and towns. Massachusetts Democratic Gov. Deval Patrick took a different route and pushed through a one-percent sales tax hike to spare schools and communities from deep belt-tightening.
Now, Rhode Island General Treasurer Seth Magaziner is hoisting a warning flag: the state may run out of cash in weeks.
A health crisis is no time to be a budget hawk. And no one knows yet how big will be federal subsidies to states. But increases proposed by Raimondo will get new scrutiny. Can the state afford her four percent education aid increase? Can DCYF get a hefty money injection? Is it prudent to as aggressively phase out the car tax, a pet project of Speaker Mattiello? Should businesses be showered with millions in economic development money when taxpayers are hurting?
State financed health care for the poor is bound to soar as laid off workers lose employer-paid insurance. The Medicaid budget has long confounded attempts on Smith Hill to control costs. It’s going to get harder.
The lone silver lining here is that during emergencies lawmakers tend to act more responsibly than usual, putting the public interest ahead of private agendas. This happened during the banking crisis and recession.
We live in a rancorous time of partisan infighting, cruel social media name-calling and an allergy to the compromises that make politics the art of the possible. Washington, D.C. politicians need to cast aside the usual corrosive rhetoric to craft a national bailout. One of the worst things that has happened in our country is the erosion in trust in government. Now lawmakers have to stop posturing, unify and show us they care about things bigger than the next election cycle. The question now is are they up to this challenge. Anxious citizens and states will be watching.
Scott MacKay’s commentary can be heard every Monday morning at 6:45 and 8:45 and at 5:44 in the afternoon. You can also follow his political reporting and analysis at our web site at thepublicsradio.org
Please note that due to social distancing practices, Scott MacKay's essay this week was recorded from his home.
