Check out my interview with Ray Rickman on this topic!

Providence has been in serious financial straits for several years. This recent report from the National Resource Network includes the following quotes:

  • The four major entities making PILOT payments in FY2016 owned 264 tax-exempt parcels with a combined assessed value of $1.9 billion
    • [These payees are Brown University, Johnson and Wales University, Providence College, Rhode Island School of Design, Care New England, and Lifespan]
  • If the parcels were taxable, City revenues would be higher by up to $69 million
  • When compared to other New England cities, Providence’s tangible and motor vehicle tax rates are among the highest and the residential owner occupied rate is among the lowest
  • Providence’s commercial and tangible tax rates are often cited as barriers to the City’s economic competitiveness, while creating a challenging issue with tax stabilization agreements
  • Providence residents and businesses bear a significant tax burden due to the City’s limited sources of revenue and large concentration of tax-exempt parcels
  • The City’s estimated, combined property tax and auto tax burden as a percentage of household earning levels is nearly double the median of other cities for most household earning levels.
  • Compared with other New England cities, Providence is one of three cities to spend more per capita on Fire than on Police (Cranston and Warwick are the other two cities)
  • Compared to eight other New England cities, Providence has the highest minimum staffing level, the highest fire suppression minimum staffing level, slightly greater per capita fire suppression staffing, and the highest minimum staffing per square mile
  • The City is already operating with a negative fund balance. If no corrective action is taken, the City will inevitably face cash flow challenges, an inability to invest in priorities, and the need to further reduce services and increase taxes.

That would seem to paint quite a dire picture. However, further research on who is writing this report provides some interesting insights. The major supporters of this organization are Enterprise Community Partners, Public Financial Management (PFM), HR&A Advisors, New York University’s Robert F. Wagner Graduate School of Public Service, and the International City/County Management Association (ICMA). It includes as strategic partners Abt Associates, Center for Community Progress, Civic Consulting USA, Coalition of Urban Serving Universities, Corporation for Supportive Housing, Institute for Building Technology and Safety (IBTS), Jobs for the Future, National Association of Development Organizations, NeighborWorks America, Trust for Public Land, University of Chicago, and University of Southern California Sol Price School of Public Policy.

The University of Chicago is the intellectual hotbed of so-called “Chicago School” neoliberal economic policy moves, the institution that produced Milton Friedman and Gen. Augusto Pinochet’s Chicago Boys, the financial minds that engineered the test run of neoliberal policy that has become part and parcel of American political economy. Later, after Robert Rubin, Bill Clinton’s former Treasury Secretary, had been directed to a young lawyer named Barack Obama by his real estate contacts in Chicago, the University offered a further level of training and qualification before the young lawyer moved into first “community organizing”, which was in fact gentrification of historic black neighborhoods, and then politics, which was really a well-spoken hustle for Rubin’s banking connections. Many of the other supporters have connections to Wall Street and neoliberal policy centers that should be scrutinized. Could this be Obama-styled “community organizing” on a national level?

What is also striking about this report is its heavy dependence on what credit rating agencies say about Providence’s finances, a typical sign of reliance on “the market”. These agencies are well-known to have been bought and sold by the Wall Street firms that crashed the economy in 2008, as highlighted by Charles Ferguson’s Oscar-winning documentary INSIDE JOB. In fact, when the rating agencies are called to task by Congress over their misbehavior related to derivatives, the financial instruments they falsely called reliable, Ferguson hilariously emphasizes how the lawyers for Moody’s, Standard and Poor’s, and the rest of the industry respond by saying their rating are just opinions and are not to be taken at face value per se!

Neoliberalism as a writing genre, a type of style that defines policy papers, is clearly present in this slide show due to its reliance on a mythical thing called “the market” that is in reality a Soviet-style controlled economy run by the banking and financial system to benefit various high-stakes players on the casino floor of Wall Street. There are almost zero markers for growth that are not seen through a neoliberal prism. For instance, this report takes specific note of Providence’s high population of English as a Secondary Language learners but fails to articulate how this population might one day make the city an economic boom center for translation services. Why? That sort of effort, which would create significant growth in the cities, would require a good deal of public spending to subsidize the education of such specialists, a neoliberal no-no when it is not a handout for those with proper connections to the banking class.

This is not suggesting that Providence is not in trouble, there are some obvious problems. But it also seems quite clear that what is being said about the city is slanted by an obvious ideological bias that dictates a Greek-styled austerity program rather than a Franklin Roosevelt-styled Keynesian recovery program. Nowhere in this report are there suggestions for higher taxes on those who can afford it but there are plenty of suggested cuts for those who might not need it or ending tax credits for corporations like Verizon and handouts for Teach for America. For instance, the discussion of a high commercial tax is so broad it could apply to the owner of a corner bodega or it could describe Textron. In the realm of policy suggestions, where it truly matters to have a concrete path to recovery, almost everything has a certain ideological bias. Furthermore, the discussion of an under-funded pension sounds strangely reminiscent of the John Arnold variety of false fire crisis and does not suggest what Dave Sirota has made clear in his writings about adjusting pension investment portfolios so to foster recovery.

It is plain here that there is something amiss with this report. How Mayor Elorza would find a source of capital from a financial institute that is not prone to mandate neoliberal policy moves in exchange is quite difficult. But perhaps if he were to move the municipal finances into something akin to a local credit union, creating a significant cashflow and leverage within the institute, something might be tenable. Another option would be seeking out loans from the BRICS countries, perhaps through the Bank of China, which has a branch located in Manhattan. When the Greek Syriza party was still considered a serious threat to the European neoliberal system, Russian President Vladimir Putin reached out on behalf of his government and offered the state a loan that would have been able to undermine the Euro’s onerous elements. Regretfully, for a variety of reasons outside their control, the Greeks chose not to go down this path and instead, when Brussels tried to force further neoliberal policy, it created the meme #ThisIsACoup.

Could we be facing the same dynamic here? Is this not unlike when Gerald Ford told New York City to “drop dead” so to allow the early neoliberal policy moves to be implemented in the Big Apple and return Wall Street to the seat of power in City Hall?