Raimondo budget boosts health premiums to fund exchange

PROVIDENCE – Gov. Gina M. Raimondo on Thursday unveiled an $8.6 billion spending plan for the fiscal year that begins in July, weighted toward efforts to increase economic activity and create jobs in Rhode Island.
The fiscal 2016 budget, which Raimondo presented to the General Assembly along with her first budget address, would require approximately $91 million in Medicaid cuts and specialized tax increases and assessments to resolve what had been a projected $190 million deficit.
“Our biggest problem is that our state’s economic engine is out of gas,” Raimondo said in presenting a budget that includes $3.5 billion in state general-revenue spending, which represents an increase of $46.5 million, or 1.4 percent, over the current fiscal year.
To add revenue, the plan proposes an increase in the cigarette tax, a new statewide property tax on nonowner-occupied vacation homes in Rhode Island worth at least $1 million, and an assessment on health care premiums for individuals and small businesses, for plans purchased both inside and outside the HealthSource RI insurance exchange. The insurance assessments, which would generate about $12 million a year, would be directed to HealthSource RI.
The spending plan includes new investments in education, economic incentives and state and local infrastructure, as part of a focus on building skills among Rhode Islanders, attracting new companies and investment, and fostering innovation in government.
“These principals,” Raimondo said, “and an unwavering focus on creating jobs and expanding opportunity, guided every decision we made in assembling this budget.”
To make Rhode Island more competitive for attracting business, Raimondo wants to eliminate the state sales tax on commercial energy over the next five years, with $5 million in tax relief scheduled for fiscal 2016.
To invest in business development, the budget proposes a $25 million economic-development fund dedicated to the Interstate 195 redevelopment district, intended to help attract an anchor business or series of businesses that will stimulate job growth. The incentives would be determined by the I-195 Redevelopment District Commission. It would not be used for a stadium or athletics complex, according to budget documents. The owners of the Pawtucket Red Sox recently proposed building a new ballpark on the former highway lands.
The budget does not propose to restore funding to the state’s historic-preservation tax credit, but instead will create a series of new tools designed to spur redevelopment of existing buildings. A package of real estate tax incentives will focus on developments near transit hubs and historic structures. It will include tax-increment financing and partial assistance for local tax-stabilization agreements. The governor also proposes to create an “anchor tax credit,” designed to encourage large employers to attract their suppliers to Rhode Island.
In tourism, the budget will create a new focus on a statewide marketing campaign, including a “compelling brand” for Rhode Island, in part by redirecting state hotel-tax funds that are now distributed to regional tourism programs. The budget also proposes to expand the state’s sales and lodging taxes to online booking companies, who do not pay taxes on their markup over the market prices, and to unlicensed rentals, such as through AirBNB, which do not pay state taxes.
In education, the budget proposes to fully fund the school-aid formula, an increase of $35.5 million over the current year, and includes $1 million in early-childhood education efforts. In addition, the state will provide $1.4 million to fund its full share of all-day kindergarten.
A proposed restructuring of state general-obligation bonds will provide $84 million over the next two years. Of the $64 million expected to be made available in fiscal 2016, $20 million will be used to establish a School Building Authority, effectively ending a longstanding moratorium on school-construction financing.
Raimondo has proposed setting the annual construction-aid appropriation for school buildings at $80 million in 2017, creating a dedicated capital fund that will expedite school-construction efforts.
The Medicaid cuts are central to resolving the projected deficit. The program accounts for nearly one-third of state expenditures, and Raimondo has included $45 million in identified cuts for fiscal 2016 in her budget. Another $46 million will be identified by the new Medicaid Working Group, working with the executive office to find areas for reductions.
The governor also wants to save money on spending for state employees and benefits. Personnel costs have been rising faster than inflation, she noted, and the cost is contributing to the state’s structural deficit. The budget proposes finding $22 million in savings in this area. According to Raimondo, the administration will work with state employees and their representatives to identify savings, while avoiding significant layoffs.
The budget also proposes:

  • Providing $950,000 to the new Executive Office of Commerce, which will oversee economic-development efforts. The budget also proposes $3.85 million in new personnel and operational support for the R.I. Commerce Corporation, which under previous administrations had had spending cuts. The funding levels would restore the economic-development organization to its highest level since 2001.
  • Providing $5.2 million for loan programs and other assistance for small businesses.
  • Spending $1 million for an “innovation initiative” to support creation of incubator space and other assistance for innovative companies in technology and other high-growth sectors.
  • Creating a job-creation tax-credit program, which would provide additional incentive for employers to create new jobs.
  • Increasing the percentage of the federal Earned Income Tax Credit that can be used as a credit against Rhode Island income tax, from the current rate of 10 percent to 12.5 percent, with the ultimate goal of 15 percent. This is designed to provide additional funds for low-income Rhode Islanders.
  • Exempting Social Security benefits from the state personal income tax, for individuals who have incomes less than $50,000, and for couples who earn less than $60,000.
    n Increasing the cigarette excise tax by 25 cents a pack, to $3.75 a pack, raising $7.1 million annually.

  • No posts to display

    1 COMMENT

    1. So basically let’s just tax everyone more. If you have a vacation home in RI that means you work for a living and pay taxes so let’s punish them. Everywhere you look in this state you see waste and corruption. I don’t see a thing about cutting welfare to people that do not deserve it! Go to the grocery store and see the people buying a whole cart of food with their welfare card, then putting up the divider and buying all the junk food with their own money. If you watch them go out to the parking lot they get in their new car and off they go with our tax money. The abusers are so bold they post on facebook the feast they buy once a month, lobster and filet mignon. Do you see any cuts for them, of course not this state is one of the top in the country for giving our tax dollars away. It’s time to leave the state and that’s what I intend to do. The 12 people I employ can come with me and let someone keep reaching in their pockets to pay for this corrupt state policies.