The Hummel Report

Investigative Reports That Get Results

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Revenue Raid

At the end of this year's session the General Assembly and governor's office were quick to publicize that they balanced the new state budget with no broad based tax increases. This week Jim Hummel focuses on a restricted fund lawmakers raided to help fill a massive budget deficit - tax money that is supposed to be going to help clean up the environment.


Hummel:  ``At the end of this year's session the General Assembly and the governor were quick to publicize that they balanced next year's budget with no tax increases. This week we focus on a fund the state raided to help balance that budget - tax money that is supposed to be going to help clean the environment.

Every time motorists fill up in Rhode Island half a penny of each gallon goes toward a state insurance fund used to clean up property like this one - where underground storage tanks once leaked gasoline into the ground.

The program, run by the state Department of Environmental Management, has paid out $53 million over  the past 13 years to clean up hundreds of parcels, some of which might have remained abandoned.

For years the program worked well: claims were approved by a board and paid out within months of filing. The original penny-a-gallon tax generated more than $4 million a year. But that all changed two years ago when the governor's office, with the support of the General Assembly, cut the tax to half a penny - giving the other half penny to the chronically ailing  RIPTA bus program.

Gray: ``We pushed hard not to have that reduction go forward.''

DEM Assistant Director Terry Gray oversees the cleanup program. He says not only did the state cut in half what was coming in - it has also withheld millions of gas tax dollars already collected - but never deposited in the cleanup fund - held back to help balance the state's growing deficit.

That means property owners - who have to front the money for cleanups and are then reimbursed by the state from the cleanup fund - are not getting paid.

Gray: ``Right now we're about a million two behind in claims.''

Hummel: ``What's been the practical effect of that?''

Gray: ``It's a delay, so as a station owner, what people are doing, people are waiting for their reimbursement for an additional six months beyond what happened in the past.''

Paolino:  ``Usually if things work the way they're supposed to, you submit it by the deadline, you should have your money in about 3 months, maybe six months, tops.''

Anthony Paolino has cleaned up two contaminated properties using the state fund - one in Foster,  which continues to operate as a gas station. And a piece of land in the heart of Pawtuxet Village, which was an abandoned gas station that he bought, cleaned up and turned into condos, putting the property back on Warwick's tax rolls. Paolino fronted - and has been reimbursed - for hundreds of thousands of dollars of cleanup costs.

Because the fund  now owes more than a million dollars that it can't pay, Paolino has been waiting a year to receive his last reimbursement of approximately $10,000.

Paolino: ``You get in line.  My last number for that reimbursement cycle is like I'm 43; so 1 through 42 get their money before I do.''

Hummel: ``Are you irritated it's been a year?''

Paolino: `` Absolutely, I'd like to have the money. I'm paying interest on it.''

Gray: ``We can't pay bills that  we don't have money for.''

DEM warned the governor - and lawmakers - of what would happen, spelling out clearly the financial ramifications in its annual report - but those warnings have fallen on deaf ears.


Gray is concerned that businesses on a tight financial margin will stop cleaning up because they are unwilling to wait an extended time for reimbursement.

Gray: ``The last thing we want to do is scale back cash flow so cleanup stops.''

And Gray is concerned the state - at some point - might fall out of compliance with the Environmental  Protection Agency because of the monetary shortfall.

Gray: ``It's a huge concern for DEM and it's been on EPA's view screen now more than ever. They're looking at our backlog and whether or not our fund is sufficiently capitalized and set up to meet that EPA mandate that came out back in the 90s. Is it an appropriate surrogate for private insurance?''

Anthony Paolino says the  legislature's move is shortsighted.

Paolino: ``You're not really balancing the budget. You're taking money from somewhere that's been allocated and supposedly when you vote to require a penny a gallon of gas, to a fund for a specific purpose.  I didn't realize you could take away from that specific purpose.''

And neither do most people who are paying at the pump.

Jim Hummel, for The Hummel Report.