PROVIDENCE – Gov. Lincoln D. Chafee proposed an $8.5 billion fiscal 2015 budget on Wednesday that freezes tuition at public colleges and extends the state historic-tax-credit program.
Chafee delivered the budget proposal along with his final State-of-the-State address that focused on education and infrastructure.
The spending plan, which would increase state general revenue spending by $104.3 million, or 3.1 percent, would also continue increases in the local school funding formula. And as he has promised to do, Chafee included $12.3 million in the budget to pay down the nearly $90 million in debt incurred by the failed 38 Studios LLC video game company. He also proposed delaying until July 2015 the creation of an Executive Office of Commerce, which the General Assembly created in reaction to 38 Studios.
“There is no question that this has been a difficult period for Rhode Island, but we are poised to emerge from it more resilient than before,” Chafee told the General Assembly. “Rhode Island is getting stronger with each day, each week, and each year – that is the state of our state. And if we continue to follow a steady, deliberate, compassionate course, avoiding short-term decisions and quick fixes, the coming year will once again be better than the last.”
The budget lacks signature changes to the state’s tax structure similar to previous efforts, all unsuccessful, to broaden the sales tax and lower the corporate tax.
A proposal to lower the corporate tax rate from 9 percent to 6 percent is linked to congressional approval of an Internet sales tax and would replace a cut to the state sales tax now scheduled if the federal legislation passes.
In education, Chafee proposes $10 million in new spending to maintain tuition at public colleges and $38 million in additional local school aid.
After restarting the state historic tax credit program last year, Chafee’s budget would open up an additional $52 million in authorized borrowing to new projects. However, the $5 million per-project cap on the program remains.
The budget closes a projected $150 million budget shortfall with a combination of prior-year surpluses, positive revenue projections, health and human services cuts and closing tax loopholes.
New tax provisions are projected to raise an additional $16.2 million in revenue and include extending the hotel tax to bed and breakfasts and adding 10 new employees to the R.I. Division of Taxation.
Absent from the budget is any provision regarding highway tolls, which are set to rise in April on the Sakonnet River Bridge after being capped by lawmakers last summer at 10 cents.
But to deal with worn-down bridges controlled by the R.I. Department of Transportation, the budget includes $10 million in spending in fiscal 2015 and $80 million over five years.
Chafee also signaled support for building a new parking garage, the cost of which has not been determined, next to the Garrahy Courthouse in Providence to encourage construction on the former Interstate 195 land.
The budget also calls on voters in November to approve $275 million in borrowing, including a $40 million bond to implement changes in the R.I. Public Transportation Authority bus hubs and $35 million to rehabilitate nonprofit arts centers and theaters.
Other budget highlights include:
$8.5 million to improve the Fort Adams sailing and event center in Newport.
$2.5 million to clean up the Rocky Point property in Warwick.
$1.8 million to expand workforce-development programs.
A continuation of the $5 million incentive program for municipalities to improve the position of their pension funds.
If the federal Marketplace Fairness Act passes Congress, in addition to the cut in corporate tax, sales tax would be eliminated on nonmanufacturing gas and electric bills.
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