Budget bill approved by General Assembly

THE R.I. HOUSE OF REPRESENTATIVES debated the fiscal 2017 budget until late in the evening. It wasn't approved until early in the morning the following day. / PBN FILE PHOTO/ELI SHERMAN
THE R.I. HOUSE OF REPRESENTATIVES debated the fiscal 2017 budget until late in the evening. It wasn't approved until early in the morning the following day. / PBN FILE PHOTO/ELI SHERMAN

PROVIDENCE – The General Assembly approved an $8.9 billion budget bill for fiscal 2017 that provides tax relief to retirees, enhances the state’s economic development tools, fully funds education, scales back a plan to tax medical marijuana and rolls back state beach parking fees to 2011 levels.

The bill, which passed the Senate 32-3 early Saturday morning and passed the House Wednesday on a 59-13 vote, will now be sent to Gov. Gina M. Raimondo for her to sign.

“This is a responsible budget that offers tax relief, appropriately funds very necessary government functions and will help set us on a path toward responsible state spending and borrowing,” Senate Finance Committee Chairman Daniel Da Ponte, D-East Providence, said in a statement. “This budget takes the very necessary step of beginning to assess what our debt obligations are so we do not overburden future generations.”
Highlights of the bill:

  • Lawmakers added an initiative to provide a state income tax exemption to all retirees who have reached the full Social Security retirement age beginning in the 2017 tax year as a means to provide tax relief to seniors living on fixed incomes. The program would exempt the first $15,000 of income from state income taxes for retirees earning up to $80,000 as single tax filers, or up to $100,000 for joint filers. Last year in the 2016 budget bill, the General Assembly exempted all Social Security benefits from state income tax for those under the same income limits. This year’s initiative applies to other types of retirement income, including public and private pensions. The move would benefit more than 60,000 taxpayers and provides $14 million of annual tax relief.
  • Legislators significantly reduced fees associated with a proposal included in Raimondo’s budget proposal to require “tags” on medical marijuana plants grown by patients or caregivers. While lawmakers maintained the governor’s goal of more closely regulating medical marijuana and assisting law enforcement efforts, it reduced the proposed tag fees from $150 each for patients growing their own plants or $350 for caregivers to a maximum of $25 for either. Those currently eligible for reduced license fees because of Medicaid eligibility or a disability would not pay any fee. That price is expected to cover only the cost of regulating the system, rather than raising revenue for other state spending.
  • The General Assembly agreed with Raimondo’s plan to increase the earned income tax credit to 15 percent of the federal credit, after raising it from 10 percent to 12.5 percent in 2016. The change will affect 83,000 taxpayers earning $50,000 or less, allowing them to keep more of what they earn, and helping Rhode Island businesses who benefit from the increased spending power of those consumers.
  • The assembly restored Medicaid COLA for nursing homes, frozen under the governor’s budget proposal, with 85 percent of the $7.8 million increase earmarked for raising wages of direct care workers in nursing facilities. Front-line workers who care for the developmentally disabled or deliver critical home care services would also benefit from the $13.3 million in the budget directed to increase their compensation. In total, the budget allocates $15.4 million more for services provided to those with developmental disabilities than the budget enacted last year.
  • Legislators also cut parking fees – mostly in half – at state beaches, effective July 1. Those who have already purchased season passes will be eligible for a credit for the difference.
  • Lawmakers added a further reduction – to $400 – in the state’s minimum corporate tax to help small businesses. Legislators reduced it from $500 to $450 in last year’s budget bill. It was cut another $50.
  • The General Assembly concurred with Raimondo’s proposal to restructure unemployment insurance taxes paid by employers, saving them an estimated $30 million. Changes to the program, which took in $113 million more than it paid out last year, would cut the average cost per worker from $708 to $631 without changing benefits or eligibility.
  • Legislators added funding for the Rebuild Rhode Island tax credit to cover financing gaps for business development or expansion projects, adding $7 million for the First Wave Closing Fund ($2 million more than the governor’s proposal), and creating a new Air Service Development Program to encourage more direct flight between T.F. Green Airport and major metropolitan areas.

Lawmakers left intact most of the governor’s proposed bond questions. The bill would place five bond referendums on the November ballot: $70 million for rebuilding port infrastructure, including $50 million for piers at Quonset Point and $20 million for an expansion to ProvPort; $45.5 million for higher education projects; up to $50 million for affordable housing (with $10 million to go toward blight remediation); $35 million for environmental and health initiatives; and $27 million for the state Veterans’ Home.

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Barbara Fields, executive director of Rhode Island Housing, said in a statement that the organization is pleased the $50 million affordable housing bond remained in the budget.
“Today in Rhode Island, the high demand for and low supply of housing is driving up the cost of living here. Data shows that many Rhode Island households are struggling to find housing that is within their financial reach. According to a recent report by Rhode Island Housing, many Rhode Islanders already spend too much on housing costs,” Fields said. “As we grow our state’s economy, it is important that we produce high-quality housing and preserve our existing homes. … The inclusion of the Housing Opportunity Bond in the budget is a step towards meeting our economic goals.”

The higher education bond includes $20 million to help develop an “innovation center” connected with the University of Rhode Island to encourage innovation and job creation by connecting the state’s businesses, medical facilities and universities.
In addition, the budget creates the Office of Debt Management, which will be responsible for monitoring public debt.
Lawmakers agreed with the governor’s proposed tuition freeze at the Community College of Rhode Island, Rhode Island College and the University of Rhode Island, as well as her proposal to allow Rhode Island students to take the SAT and the PSAT for free and during the school day.
The assembly added funding for the R.I. Public Transit Authority to avoid a need for fare increases through the end of the year.
Legislators also restored $300,000 to the office of the Health Insurance Commissioner to maintain partial funding for employees who oversee insurance regulation oversight.
And, they also restored tourism promotion funds to the state’s regional tourism districts at their 2015 level for one year, so they can promote the state’s tourism resources while the R.I. Commerce Corp. reorganizes its statewide tourism promotion campaign.
The Assembly also added a measure to clarify state law regarding transportation network companies, such as Uber, to ensure that they are subject to state sales tax, just like taxis.
Legislators eliminated the Community Service Grant program. Instead, there are now two methods of funding community organizations: itemized budget appropriations and competitive programs, both administered by state agencies. The two programs now total approximately $6 million, lower than $11 million in the current year’s budget.
Laurie White, Greater Providence Chamber of Commerce president, also weighed in on the budget, saying it built on gains achieved last year and enacts additional measures focused on the state’s economic competitiveness and growth.
“Although much work remains to be done to get us to where we want to be, these results mark continued progress and highlight a strong commitment by the administration and the General Assembly to get things done and move Rhode Island forward,” White said.

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