Another state with higher poverty; Rhode Island

After the US Census Bureau released the poverty figures last week, we are see stories for individual states that further break down the numbers.

In an area of the US that has very little poverty, the state of Rhode Island has seen the biggest increase in the past year. The tiny state now has more poverty than any other in the New England region. The increase is blamed on the global recession and the cuts in the number of jobs.

From the Providence Journal, writer Paul Edward Parker has this look at the census numbers.

From 2007 to 2008, Rhode Island displaced Massachusetts as the New England state with the highest poverty rate. The state also leap-frogged past Maine and Vermont in the process, going from fourth highest to highest in the six-state region.

Even so, Rhode Island didn't fare too badly compared to the national average because the New England had some of the lowest poverty rates in the country. New Hampshire had the lowest rate nationally, at 7.0 percent.

Connecticut was third, with 8.1 percent, and Vermont sixth, with 9.0 percent. Rhode Island's 12.7 percent rate tied it with Kansas for 26th lowest in the nation, and the state had less poverty than the country as a whole, which measured 13.2 percent.

"So many people have lost their jobs," said Linda Katz, policy director, the Poverty Institute at the Rhode Island College School of Social Work. " The increase in poverty is related to the fact that people have lost their jobs and their source of income."

Katz noted that Rhode Island's unemployment rate jumped more than two percentage points from July 2007 to July 2008. Revised numbers from the federal Bureau of Labor Statistics show the rate increased during that period from 5.2 percent to 7.9 percent.

"Our concern, of course, is going forward," she said. "We're very concerned about what the data in 2009 is going to show because we've fallen much deeper into economic hardship."

Program to help poor pay for heat may be cut

from The Providence Journal

By Timothy C. Barmann

At a time when Rhode Islanders are facing record-high energy prices, the General Assembly is poised to eliminate a law that was established to help the poorest low-income families pay their utility bills.

The House of Representatives today was scheduled to consider the state budget bill, which contains a provision that repeals the “affordable energy” legislation passed in 2006.

The reason: the state simply cannot afford the program, according to Rep. Steven M. Costantino, chairman of the House Finance Committee, which recommended the action.

“Unfortunately, we could no longer afford this tax credit,” he said in a statement, responding to The Journal’s request for comment.

“We had to spread the pain throughout the budget and this was one of the many items that we were able to identify for taxpayer savings.”

Eliminating the legislation will save millions over the next few years: $4.2 million in fiscal year 2009; $8.6 million in 2010; $13.1 million in 2011; $17.8 million in 2012; and $18.5 million in 2013, according to an estimate by the House Finance Committee.

The timing couldn’t be worse for those struggling with heating costs, which are expected to be hundreds of dollars higher next winter, compared to last.

“It’s a disaster,” said Henry Shelton, coordinator of the George Wiley Center, a Pawtucket agency that lobbies on behalf of low-income families. With no state legislation in place to help with high energy costs, he said, there are likely to be even more utility shutoffs this year than there were last year.

Sen. William Walaska, D-Warwick, one of the original sponsors of the law, said the news is “unfortunate.”

“It’s another casualty of the budget deficit,” he said.

The decision to repeal the energy affordability plan comes on the heels of the most costly heating season Rhode Islanders have ever faced. The number of households that lost utility service last winter for non-payment set an all-time record. Utilities turned off service to a total of 30,144 households, according to state regulators, the highest number ever recorded.

Government forecasts call for next winter to be even more expensive as crude oil prices have skyrocketed to more than $130 a barrel.

Those who use heating oil are expected to be hit the hardest. With the current average price of heating oil at $4.619 a gallon, a typical household that uses 666 gallons over the course of a year will pay $3,083 in heating costs. That is $775, or 34 percent, more than this past year’s cost of $2,308, according to calculations by The Journal, using heating oil prices provided by the state Office of Energy Resources.

Those who use natural gas are expected to pay at least 10 percent more this coming winter. The typical heating customer who uses 922 therms of gas (the same amount of energy as in 666 gallons of heating oil) will pay $1,634 for heat over the next 12 months, compared to $1,483. (These calculations assume that the Public Utilities Commission approves a 10-percent increase in natural gas rates proposed to begin July 1.)

About 42 percent of all Rhode Island households heat with oil, according to the 2000 U.S. Census. About 46 percent use natural gas.

The “affordable energy” legislation was created after several years of efforts and negotiations by community groups, legislators, state regulators and the utility companies.

The law had several components: a discount of up to 50 percent on natural gas distribution rates; a 25-percent discount on heating oil costs for “very low income” households; weatherization and energy efficiency programs; and a plan to forgive 25 percent of a customer’s overdue back balance if they kept up with a three-year payment plan.

National Grid estimated that about 16,000 customers would be eligible for the distribution rate discount. This aspect of the law was to begin providing help last year. But implementation was delayed until 2009 because the General Assembly and Governor Carcieri did not appropriate money to pay for it.

The program was to be financed by diverting some of the money the state receives from an existing tax. This “gross earnings tax” is 4 percent on electric companies and 3 percent on gas companies. National Grid passes on these taxes to their customers. Another source was to be a portion of the 7-percent tax on the sale of heating oil and propane purchased by commercial customers.

The debt forgiveness program had a different financing source. Past-due bills were to be treated as “bad debt” by the utility companies. Such costs are passed along to all customers in the form of higher rates.

When Walaska introduced the legislation, he said the state could afford the program because it was benefiting from the increased tax revenue that resulted from a sharp rise in energy costs.

The cost of the program, which was estimated to be about $16 million a year, was based on the amount of extra money the state was receiving as a result of higher utility rates, the legislators said at the time.

Since the state never set aside money for the assistance program, it has not helped many. One part of the program that wasn’t tied to a state appropriation –– the debt-forgiveness plan –– was put into place.

There were 1,459 natural gas customers who signed up for the 36-month payment plan, but only 288 have been able to keep up with their payments and remain on the plan, according to Thomas Kogut, a spokesman for the Division of Public Utilities and Carriers. Figures for electricity customers were not available yesterday, he said.

Shelton, of the George Wiley Center, said the existing heating-assistance law was flawed because it didn’t take into account a person’s income in determining the level of help to be provided. But he said the law was better than no law at all.

A better way to provide heating assistance, Shelton said, is contained in a new piece of legislation by Rep. Arthur Handy, D-Cranston, that was heard last night in the House Finance Committee.

Advocates for children raise alarm

from the Providence Journal

By Jennifer D. Jordan

While the percentage of Rhode Island children living in poverty has dropped to 15 percent from 21 percent in recent years, child advocates worry this progress will be derailed by a series of deep cuts to welfare and other safety-net programs for low-income families proposed by Governor Carcieri.

Faced with an estimated $384-million deficit for the coming fiscal year, Carcieri, a Republican who has vowed to not raise taxes, has proposed widespread cuts to early-childhood programs, child care, health care and cash assistance for low-income families. The Democrat-led state legislature is drawing up its own spending proposal for fiscal 2009, but lawmakers have indicated they are prepared to make significant reductions and are reluctant to raise taxes.

Without such support programs, says Elizabeth Burke Bryant, executive director of Rhode Island Kids Count, struggling families will slide back into deeper poverty. The advocacy organization today releases the latest information on children’s well-being, 2008 Rhode Island Kids Count Factbook, at an 8 a.m. breakfast at the Crown Plaza Hotel in Warwick, which Carcieri is expected to attend as he does annually.

Bryant credits the investments state leaders have made over the years with the decrease in childhood poverty. She is asking lawmakers to continue their support, particularly as almost half of the state’s 35,456 poor children live in extreme poverty, defined as a family of three with an income of less than $8,353 a year.

“Our investments in child care assistance and health care have been a very important part of the success story,” Bryant said. “I’m concerned that with less access to these programs, we run the risk of having that poverty statistic move in the wrong direction. We need to continue to invest in these programs that in the long run save the state a lot of money.”

The proposed cuts include terminating cash assistance to 3,400 low-income children for a savings of $8 million; reducing to two years from five the length of time families can receive welfare benefits, which include access to education and job training for parents; cutting 8,500 children from the state subsidized health care program, RIte Care; eliminating 400 of 2,800 Head Start preschool slots for a savings of $3.3 million; and closing a preschool program called Comprehensive Services that serves about 255 low-income 3-, 4- and 5-year-olds, diverting the $1.5 million in federal financing to other areas.

Carcieri disagrees, saying his cuts to such programs are minimal and that all branches of state government must tighten their belts to help bridge the budget deficit.

“The governor does not believe that the comparatively small changes he included in his budget plan will significantly impact the progress that has been achieved,” said Jeff Neal, spokesman for the governor.

CHILD ADVOCATES say they are most worried about direct cuts to children, which include early-childhood education, health care and cash assistance through the Family Independence Program.

“It’s very disturbing, what is going on in Rhode Island right now,” said Cynthia Garcia Coll, a professor of education at Brown University. “Why is it, when things get difficult, we take the most vulnerable, the most in need, and cut those people first? For me, this is upside down, going against all the data we have that says the earlier we make investments in children, the better cost benefit for society in general.”

Research shows low-income children benefit from high-quality daycare, preschool and Head Start programs, said Garcia Coll, particularly since children from families at or below the federal poverty level lag 18 months behind their peers in learning and social skills by age 4.

“We know that poverty is the strongest predictor in a child’s development in terms of education, health, risky behavior and incarcerations,” she said. “Cutting [early-childhood] investments is the worst thing we can do for kids.”

Garcia Coll said she is also troubled by the governor’s executive order to crack down on illegal immigrants, pointing out that the vast majority of the children of immigrants living in Rhode Island were born here — 88 percent, according to the U.S. Census 2006 American Community Survey, cited in the factbook.

“You ask immigrant parents, and 98 percent of them think a good education is the best thing they can give their children, and 96 percent want their kids to be engineers, doctors, lawyers,” said Garcia Coll, who is writing a book on immigrants. “In terms of family values, immigrant families have the most American family values you can imagine. They are dreaming the American dream, like any other generation.”

Linda Katz, policy director of the Poverty Institute, says she is concerned about the proposed cuts to 3,400 children who receive cash payments through the Family Independence Program, and other reductions to the welfare program that is designed to help low-skilled parents get jobs within five years. It also provides a cushion for parents with disabilities that prevent them from working, including mental illness. Carcieri wants to limit the program to two years.

“These changes will impact the state’s most vulnerable children,” Katz said. “This will end the child entitlement to the safety-net payments of $6 per child per day, and limit family eligibility for cash assistance to 24 months in a lifetime.”

Child and poverty advocates say that in many respects, FIP has been a success. Since the state adopted it a decade ago, the number of families receiving cash assistance has dropped in half, from 18,428 households to 9,993, and state spending on the program fell from $58 million a year in 1996 to $16.1 million in 2007, according to Rhode Island Kids Count.

To help parents get job skills and return to the work force, the state invested in child-care subsidies, early-childhood programs and health care for low-income families. With those investments taken into account, welfare and child care cost $55.3 million last year — $3 million less than the state was paying in just cash assistance 11 years ago.

In addition, Katz said the $554 monthly payment to poor families has not changed since 1989, while the cost of living has gone up 67 percent.

R.I. Kids Count finds child poverty down

from Providence Business News

By Emily Sutton

WARWICK – The child poverty rate in Rhode Island declined to 15.1 percent in 2006 from 21 percent in 2004, according to the 2008 Rhode Island Kids Count Factbook released today.

That means the number of Rhode Islanders 18 or younger living under the federal poverty threshold – with income of less than $16,705 per year for a family of three and $21,027 for a family of four – was almost 15,000 fewer in 2006 than in 2004.

“Child poverty decreased in our state between 2004 and 2006, during a time when the state was making critical investments in child care, health care and adult education,” Elizabeth Burke Bryant, executive director of Rhode Island Kids Count, said in announcing the findings.

“It is imperative that we maintain and restore our critical investments in working families so that they can access the child care, health care and education necessary for stable employment,” she continued. “Children need health care, high quality child care and early education to grow, develop and succeed in school.”

The annual report evaluates 62 aspects of children’s lives, charting improvements and declines to give a clear picture on the well-being of children in Rhode Island.

Among other areas evaluated, the Family Independence Program – Rhode Island’s welfare program – has seen a 46-percent decline in caseloads, from 18,428 in 1996 to 9,993 in 2007. FIP provides families with cash assistance and work supports, such as food stamp benefits, health insurance and subsidized child care.

It is unclear whether the decline may be attributed to budget cuts or to success rates, or a combination of the two. In 2006, about 3,500 families were able to leave the program for employment, while state funding for cash assistance has been cut to $16 million in 2007 from $58 in 1996.

A positive finding in the report is that 93.6 percent of the children in Rhode Island had health insurance in 2006: Sixty-four percent received care through their parent’s employers; 30 percent had health insurance through RIte Care, the state’s Medicare program; and only 6 percent were uninsured.

Rhode Island also had the lowest child death rate, among children ages 1 to 14, of any state in the country.

But the number enrolled in child care on full or partial subsidies has fallen significantly, to 9,008 children statewide in 2007 from 14,333 in 2003.

And last year, the budget for the Child Care Assistance Program was cut by $17 million while family eligibility was rolled back to 180 percent of the federal poverty level, from the previous 225 percent. As a result, 1,463 children were removed from the program.

In addition, the Comprehensive Child Care Services Program, which provides support to children and families eligible for but not receiving Head Start aid, as well as state-funded Head Start slots, are being targeted for elimination, at total projected savings of at least $3.3 million. (Head Start is a federally-funded program designed to help lower-income preschoolers catch up with their higher-income peers, whom they typically trail by 18 months in development.)

In the current school year, Head Start was able to serve 48 percent of the estimated 4,848 eligible children in Rhode Island. Nationally, the program serves about half of all eligible children.

“High-quality child care and early-learning programs for infants, toddlers and preschoolers have long-lasting positive effects on how children learn, develop, cope with stress and handle their emotions,” Bill Bentley, president and CEO of Voices for America’s Children, said in his keynote speech at the Kids Count breakfast today.

“Investments in high-quality child care and early education are some of the most cost-effective investments states can make – with both a short-term pay-off in terms of healthy child development and a long-term pay-off in terms of reduced special education and juvenile justice costs.”

Rhode Island Kids Count is a statewide nonprofit that works to improve the health, economic well-being, safety, education and development of Rhode Island children. To learn more or to view the full 2008 Rhode Island Kids Count Factbook, visit www.rikidscount.org.

For many, welfare help exceeds limit

from the Providence Journal

By Steve Peoples

Journal State House Bureau

PROVIDENCE — Thousands of poor Rhode Islanders have received cash welfare benefits for longer than five years, the time limit adopted by state leaders during the sweeping welfare changes of a decade ago intended to push poor families into the work force.

Nearly half of the state’s 10,755 families receiving cash assistance last year had been on welfare rolls for more than five years, according to data provided by the Department of Human Services. And nearly one quarter of the families had been on cash assistance for more than 10 years.

The cash benefit, known as the Family Independence Program, has been thrust into the state spending debate as policymakers grapple with how to fill a deficit next year estimated as high as $450 million, or more than 13 percent of state spending.

Governor Carcieri has made headlines with a workforce-reduction plan he hopes will save $100 million next year by eliminating 1,000 state jobs. But he will have to go much further to present a balanced budget — as required by law — on the third Thursday in January.

The governor has suggested widespread cuts to social programs, but has been reluctant to release specific proposals — except regarding the Family Independence Program.

Carcieri said on talk radio in recent weeks that he would propose cutting in half, from 60 months to 30 months, the time limit for Rhode Island families receiving cash benefits. It is the same plan blocked by the General Assembly when he proposed it two years ago.

It is unclear how much the plan would save taxpayers. The Family Independence Program cost Rhode Island $13.3 million last year in a budget of more than $3.2 billion in general revenues.

And the Department of Human Services data suggest that state law contains exemptions that would make new time limits irrelevant for a large percentage of welfare recipients.

“It was a policy choice that we made to have a more liberal program than other places,” said Gary Sasse, executive director of the Rhode Island Public Expenditure Council, who was involved in creating the welfare changes in 1996. “But when you look at our budget situation, you have to ask questions about what level of services we can afford.”

Rhode Island is not unusual in its decision to cap welfare benefits at 60 months over a person’s lifetime. Thirty-seven states have a 60-month limit and five states and the District of Columbia have no limit, according to an analysis provided by the Poverty Institute at Rhode Island College.

But Rhode Island law contains broad exemptions that explain, in part, why the state had the third-highest number of recipients on welfare as a percentage of population in the nation last year. The analysis, released in Congressional Quarterly’s 2007 State Fact Finder, ranks Massachusetts as 17th and Connecticut as 30th.

The Poverty Institute’s policy director, Linda Katz, explained that when drafting the initial legislation, lawmakers purposely exempted children and the working poor from time limits.

Indeed, Rhode Island law allows children to receive cash benefits indefinitely even if their parents’ time runs out. “That is certainly an area where Rhode Island made a policy decision where we’re not going to hurt children,” Katz said.

Last year there were 4,232 “child only cases” (out of a total of 10,755) in which a parent or caretaker did not qualify for cash assistance, but the child continued to receive checks, according to the Department of Human Services.

Similarly, there were 1,427 people on welfare last year who held jobs. State law allows single parents to work 30 hours a week while indefinitely receiving reduced cash benefits from the state, as long as the total income doesn’t exceed federal poverty guidelines.

“Those people are working, but they’re still very poor,” Katz said. “If we want to end that support, then we need to figure out how to get those parents more skills to get them a better paying job.”

Exemptions also include families that have a child under a year old or those in which a mother is in her third trimester of pregnancy, disabled adults, parents of a disabled child, and victims of domestic violence. Welfare recipients must participate in job-training programs, education programs or work, unless exempted.

The governor’s office, meanwhile, fashioned the data as evidence that the Family Independence Program must be altered.

“The fact that nearly half of Rhode Island’s welfare recipients continue to receive benefits over the five-year limit, and up to a quarter of recipients have been on welfare for over 10 years, demonstrates conclusively that the Family Independence Program has not been effective in moving people from welfare to work,” said the governor’s spokesman, Jeff Neal. “From the governor’s point of view, this lack of effectiveness is neither positive for Rhode Island taxpayers nor for the majority of welfare recipients.”

And Neal cited data backing up Carcieri’s claims last week that, “Most of the people on our welfare programs are single women, unmarried with multiple children.”

Data collected by the DHS shows that 93 percent of families that received cash assistance in Rhode Island last year were led by a parent who is single, separated, widowed or divorced. And 92 percent of the families are headed by women. Also, one third of the total Family Independence Program recipients has “added a child to their household” while on welfare. But 77 percent of all families in the program had one or two children.

Overall, however, the welfare changes adopted a decade ago have dramatically reduced the number of families receiving cash assistance. The rolls have dropped from 18,815 households in 1997 to 10,755 last year, with a corresponding drop in the state dollars spent on the program, from $58 million to $13.3 million.

Katz said she takes offense to the governor’s recent comment that the state welfare programs have “been enabling and continue to enable a lot of bad decisions.”

Poverty Task Force Reports To Mayor

from WJAR

PROVIDENCE -- Mayor David Cicilline received the recommendations of his Poverty, Work & Opportunity Task Force on Thursday.

Cicilline created the task force in January to bring together public and nonprofit organizations to look at the problem of poverty in the city and to help the working poor change the course of the lives for the betterment of their families.

The task force reported that 25 percent of Providence's families are living in poverty and that 35.7 percent of the city children under 18 live in families with incomes below the federal poverty threshold of $20,444 a year for a family of four.

Cicilline told a group of civic leaders what the city will do to change the numbers and move families out of poverty and into prosperity.

"It used to be that the American dream was available to anyone who was willing to work hard enough. But in today's economy, too many families are doing everything right and still getting left behind," Cicilline said.

Elizabeth Burke Bryant, executive director of Rhode Island Kids Count, said the next step for the task force is to make sure the city and the mayor stay on track in implementing the recommendations.

Those recommendations include helping low-wage workers improve skills and obtain quality jobs, and finding ways to connect young people to quality jobs and to higher education.

Child poverty numbers dip, study reports

from the Newport Daily News

By Sean Flynn/Daily News staff

Poverty in Newport County and the state as a whole is declining, according to data recently released by the Census Bureau's 2006 American Community Survey and now being publicized by Rhode Island Kids Count.

Child poverty in Rhode Island decreased from 19.5 percent in 2005 to 15.1 percent in 2006. The number of children, people younger than 18, living in poverty statewide decreased from 46,894 in 2005 to 35,456 in 2006. Rhode Island now ranks 17th in the country for child poverty, an improvement from last year when Rhode Island ranked 35th.

"This significant drop in Rhode Island's child poverty rate is good news for Rhode Island families," said Elizabeth Burke Bryant, executive director of Rhode Island Kids Count, a children's policy organization that collects data and information related to the well being of children. "We are seeing the results of our state's investments in children."

Rhode Island families living below the poverty level decreased from 8.9 percent in 2000 to 7.8 percent in 2006, while the number of individuals living in poverty decreased from 11.9 percent to 11.1 percent, according to U.S. Census figures. The poverty threshold is a total annual household income of $16,242 for a family of three.

Elaine Farber, a research analyst for Kids Count, said the child poverty figures show the strongest decline because there can be multiple children in families, while other families just include two adults.

She said Rhode Island in recent years has helped parents go to work through child-care subsidies. She said people at Kids Count now are concerned the state may lose ground because of child-care subsidy cuts made by the General Assembly this year to balance the budget. Families with incomes up to 225 percent of the federal poverty level were eligible for subsidies before the cuts. Now, only families with incomes up to 180 percent of the federal poverty level can qualify. Also, children ages 13-15 no longer qualify for child-care assistance.

"With RIte Health Care, child care and other programs, Rhode Island has done a good job helping low-income families and children," Farber said. "We don't want that to change."

U.S. Census figures show poverty in Newport County also has been decreasing in recent years. Newport County families living below the poverty level decreased from 5.4 percent in 2000 to 2.9 percent in 2006, while the number of individuals living in poverty decreased from 7.1 percent to 5.7 percent.

Kat Keenan, a policy analyst from Kids Count, presented the 2006 census data to community and policy leaders this week at the Newport Public Library. The American Community Survey collects data annually for communities and counties with a population of 65,000 or more, so a breakdown for the individual communities in Newport County is not available.

Comprehensive data is collected every 10 years during the decennial census. According to Census 2000, there were 5,199 children younger than 18 living in Newport. With 24 percent of those children living below the poverty threshold, Newport seven years ago had the fifth-highest child-poverty rate in the state. Of the 1,267 children living below the poverty threshold, almost two-thirds lived in extreme poverty. That is defined as income at or below half of the federal poverty line. For a family of three, that would be an annual income of $8,121 or less.

Keenan said children in poverty are more likely to have health and behavioral problems, experience difficulty in school, become teen parents and earn less as adults.

"We know that children living in families with incomes below the poverty threshold are at much higher risk for poor outcomes," Bryant said. "Reducing child-poverty rates directly influences a child's chance for success."

Poverty Institute urges new look at tax breaks

from The Providence Journal

By Scott Mayerowitz

PROVIDENCE — As the state’s leaders scramble to find ways to close a multimillion-dollar deficit, the Poverty Institute at Rhode Island College has come up with its own list of suggestions to ease the state’s budget problems.

The advocacy group says that state leaders too often focus on cutting expenses and need to look at increasing revenues.

Among its suggestions: broaden the sales tax to include services, close corporate tax loopholes, freeze the phase out of the car tax and consider reversing the elimination of the state’s capital-gains tax. Lawmakers must also reassess the historic and film tax-credit programs, the group says.

“This year we are asking policymakers to apply the prove-it-or-lose-it test to the myriad of tax breaks and exemptions that result in Rhode Island losing million of dollars each year,” said Kate Brewster, executive director of the Poverty Institute.

Rhode Island faces a $105.1-million budget shortfall this year and a potential $254-million deficit next year.

The Poverty Institute says in a new report that there are many tax breaks that have been created by lawmakers over the years to promote economic development but the benefit of these breaks has never been assessed.

“In 60 percent of cases, the Division of Taxation is unable to estimate how much revenue is lost each year due to special tax treatment,” the report says.

The group says that Rhode Island’s historic tax-credit program “has been extremely successful in promoting urban investment.” However, it notes that there is no cap on the project size or on the total amount of credits available in the state in a given year. Next year, the program is expected to cost Rhode Islanders an estimated $85 million. The Poverty Institute says the costs “have become substantial and warrant review of the program.” Among the suggestions: find a more efficient way to give out the credits and consider some type of cap on the number issued at any given time.

There were similar concerns about the lack of caps on the state’s film tax-credit program. The group also says, citing other studies, that the program does not appear to provide a major economic stimulus.

“Both Connecticut and Massachusetts have passed similar credits since Rhode Island’s motion picture tax credit was enacted. This eliminates any competitive advantage Rhode Island may have had in trying to ‘jump-start’ a local film production industry,” the report says.

In the area of sales tax, the Poverty Institute suggests that the state start taxing services. Some services currently exempt from taxation that it suggests now should be included under the state’s 7-percent sales tax are dry cleaning, golf green fees, marina fees and fitness center memberships.

The Poverty Institute says the state should stop phasing out the motor vehicle excise tax because at this point the phase-out is only benefiting those with expensive cars. The exemption currently covers the first $6,000 of a car’s value.

“Low-income car owners already are largely exempt from the tax, so further hikes in the exempt value will not have a progressive impact on the state’s overall tax system,” the report says.

A lot of the suggestions revolve around business taxes.

For instance, in 2004, lawmakers created a sales-tax exemption for aircrafts and parts in an attempt to get more CEOs to relocate to Rhode Island. The Poverty Institute says the state has never studied if the tax break — which cost the state $1 million in 2005 — has led to any companies moving to Rhode Island.

Others involve exemptions that allow companies operating in multiple states to avoid certain taxes.

Another provision of the tax law — called passive investment — exempts Rhode Island companies from paying tax on income they earn from the management of intangible assets, such as logos, copyrights and patents. The Division of Taxation estimates that Rhode Island loses $39.1 million a year because of this exemption.

Finally, the group says Rhode Island needs to look at bringing back a capital-gains tax. The state’s capital-gains tax, once at 5 percent, will be completely phased out by next year. The move was originally aimed at being competitive with Massachusetts. However, Massachusetts recently brought back its 5.3-percent capital-gains tax. Capital gains are typically paid by people who have enough money to have some type of investment portfolio.