House finance committee approves $8.2B fiscal 2014 budget
THE R.I. HOUSE FINANCE COMMITTEE approved a fiscal 2014 budget on Tuesday that calls for $8.2 billion in spending, including the first payment on the 38 Studios bonds that the bankrupt company defaulted on.
PROVIDENCE – The House Finance Committee approved an $8.2 billion Rhode Island budget for fiscal 2014 unveiled by Democratic leaders Tuesday night that forgoes a corporate tax-rate cut sought by Gov. Lincoln D. Chafee, but includes the first state payment for the failed 38 Studios LLC loan guarantee.
The budget, which is scheduled for a vote in the full House next Tuesday, restarts the suspended state historic preservation tax credit program on a limited scale, with $34.5 million in previously abandoned credits made available to new projects. However, new projects will face a $5 million cap on credits, reducing its potential to help large projects such as the proposed restoration of the Industrial Trust Tower in Providence.
As they have the last two years, legislative budget writers ignored many of Chafee’s signature economic proposals.
Chafee had proposed cutting the corporate tax rate from 9 percent to 7 percent over three years and paying for it by scaling back tax breaks including the Jobs Development Act.
CVS Caremark Corp., which receives the majority of benefits from the Jobs Development Act, opposed Chafee’s proposal.
The House budget also left out $15 million in aid to cities and towns proposed by the governor.
As the first step in paying back the estimated $90 million in outstanding 38 Studios debt, the House budget includes $2.5 million to make an initial payment next May. But it also includes $50,000 to commission a study of the potential cost of defaulting on the 38 Studios moral obligation bonds.
In agreement with the governor, the House budget includes an additional $40 million in education spending, including $6 million to prevent tuition hikes at the state’s public colleges.
To help Rhode Island liquor stores facing competition from Massachusetts, which does not charge sales tax on alcohol, the House budget would suspend sales tax on wine and liquor for 16 months. To offset the lost revenue, the budget would increase the excise tax on wholesale purchases. Taxes on beer would remain the same.
Other budget highlights include:
$10 million to start the municipal road and bridge repair revolving fund proposed by General Treasurer Gina M. Raimondo.
$4.5 million for a program that pays for a person collecting unemployment compensation to receive job training at a business in the state.
$10 million to allow businesses to accelerate depreciation on the value of taxable new equipment.
A statewide sales tax exemption on all art, including books, paintings, performance and crafts.
A $1 million annual increase in the share of video slot revenue from Newport Grand that the facility can keep.