House passes proposed budget

By Kimberley Donoghue
PBN Web Editor
Twitter: @kydonoghue

PROVIDENCE – The R.I. House of Representatives approved a fiscal 2012 budget by a vote of 60 to 9 Saturday that discards Gov. Lincoln D. Chafee’s proposed sales tax expansion.

The vote took place shortly before 2 a.m. Saturday following 10 hours of debate, The Associated Press reported.

The $7.7 billion plan, first approved by the House Finance Committee on June 17, closes the state’s initial deficit of approximately $300 million by cutting some programs previously paid for with federal stimulus funds, state department consolidations, as well as a small surplus and higher-than-expected revenue from the previous year, a General Assembly news release said.

The plan now moves to the state Senate.

The budget discards Chafee’s $165 million sales tax expansion but makes a handful of items subject to the existing 7 percent sales tax, including: pre-written computer software delivered electronically, insurance proceeds, nonprescription medicine and sightseeing package tours.

The House selected these items “based on the tax structures of neighboring states to avoid putting Rhode Island’s business at a competitive disadvantage,” it said.

“We listened to the members of the public and to our business leaders, who made it very clear that they wanted us to hold the line on tax increases,” said House Finance Committee Chairman Helio M. Melo about discarding Chafee’s sales tax proposal. “The House has felt that Rhode Islanders are struggling enough and we couldn’t place an additional tax burden on them.”

The passed legislation, 2011-H 5894Aaa, would also end refunds of sales tax that some companies get on construction materials through the R.I. Economic Development Corp. and the Industrial Facilities Corporation.

The proposal would come into effect on Oct. 1 and would raise an estimated $17 million in revenue for 2012 and $25 million in 2013.

The budget also includes:

• $78 million in funding reductions to various health care providers in order to deal with a $230 million loss in federal stimulus funding that previously assisted Medicaid-funded health care programs.

• Increases the cosharing requirement for the RIte Care health care program, but maintains the same eligibility requirements. Families, at the 150 to 250 percent of poverty level, are expected to see their coshare to increase by about $30 per month.

• Rejects Chafee’s proposal to eliminate the R.I. Pharmaceutical Assistance to the Elderly Program.

• Fully funds the first year of a 10-year phase-in of a new school aid formula adopted by the General Assembly last year. That will amount to $17 million in new funding for elementary and secondary education.

• $5.5 million in additional funding, beyond the governor’s proposal, for communities to offset the expenses of hosting state facilities as part of the Payment In Lieu Of Taxes program.

• Maintains the governor’s plan to increase state beach parking fees.

• $4 million increase for public higher education.

• Includes a provision to ask voters in the 2012 election whether they support tables games at Twin River in Lincoln.

• Freezes longevity bonuses for state employees.

• Consolidates the Department of Elderly Affairs into a division of the Department of Human Services and rolls the Water Resources Board into the Statewide Planning program.

• Leaves a separate Department of Veterans’ Affairs unfunded but funds a director; rejects a plan to require those in the state veterans’ home to pay 100 percent of their income to the home and maintains the current 80 percent fee.