Raimondo unveils $9.2B budget that highlights educational incentives, auto excise tax decrease

GOV. GINA M. RAIMONDO released a $9.2 billion budget Thursday for the fiscal year that begins July 1. This is her third budget since she has been in office. / PBN PHOTO/RUPERT WHITELEY
GOV. GINA M. RAIMONDO released a $9.2 billion budget Thursday for the fiscal year that begins July 1. This is her third budget since she has been in office. / PBN PHOTO/RUPERT WHITELEY

PROVIDENCE – Gov. Gina M. Raimondo on Thursday released a $9.2 billion budget that is broadly directed at bolstering the educational prospects of Rhode Islanders, continuing recent momentum in adding new jobs and creating new assistance for manufacturers.

In her third budget, Raimondo has introduced several new initiatives, including a scholarship program for students attending state institutions that pledges to give them two years of free tuition and mandatory fees, if they maintain good grades and attend full-time.

The spending plan, which was delivered to the General Assembly for its review, recommends $3.8 billion in general revenue expenditures, an increase of $91.8 million, or 2.5 percent.

The budget, which is for the fiscal year that begins July 1, proposes to close the state’s estimated deficit, in part by the creation of new revenue collected from internet sales. The state plans to apply the 7 percent sales tax to remote or online sellers without a physical presence in Rhode Island. The budget includes $34.7 million in additional revenue. In the last several years, Rhode Island sales tax collections have been flat, reported Michael DiBiase, director of the R.I. Department of Administration. The state attributes that to online sales that currently do not include a sales tax, as do brick-and-mortar purchases.

- Advertisement -

In other measures, Raimondo is pledging to decrease the automobile excise tax by as much as 30 percent. The cut focuses on the valuation of vehicles, and requires towns and cities to use an average trade-in value when determining the value to be taxed, which replaces current methodology that relies on “clean retail” value. The tax break is expected to reduce collections by $58 million in calendar year 2018. The state will reimburse communities for the lost revenue “dollar for dollar,” according to DiBiase.

“It provides relief, evenly distributed, to taxpayers,” he said.

In education spending, the governor, for the third consecutive year, is fully funding the state education formula.

The college scholarship proposal, called Rhode Island Promise, is intended to provide a powerful incentive for strong students to remain in-state and finish their degrees on time.

It would take effect with the Class of 2017, who, if they attend the Community College of Rhode Island, would qualify for a free associate’s degree. If the students attend either the University of Rhode Island or Rhode Island College, they would become eligible in their junior year, as long as they maintain a full-time schedule of classes.

The scholarship would not be restricted by family income. Students would have to maintain a 2.0 GPA to receive it. It is expected to cost $30 million annually on full enactment. Raimondo, in her fiscal 2018 budget, includes the $10 million anticipated for start-up costs.

Speaking to reporters before the release of the budget, URI President David Dooley said the scholarship program would have a powerful effect on the state’s four-year university, and he explained that he has a team now working on potential impacts. He explained that he anticipates it could add as many as 20 percent more in-state students to the URI campus by full implementation.
The URI campus now has 17,000 students, he said.

“We’re already working now to build strategies and the steps that we need to accommodate an enrollment increase,” he said.

A collateral benefit of this strong financial incentive, he said, is that the state’s strongest and brightest students may opt for a Rhode Island education rather than leaving the state. “We know when they graduate from our institutions, at Rhode Island College and the University of Rhode Island, they tend to stay in Rhode Island,” Dooley said.

It is too early to tell what kind of an impact the scholarship might have on the selectivity of the university in admissions, he said. Immediate impacts would include making sure the university has sufficient courses and support services to accommodate an increase in enrollment, he said.

“Everything is a projection. We’ll have to see what the real numbers are,” Dooley said.

In business-related initiatives, the budget continues several programs begun in recent years to attract new employers to Rhode Island, to encourage existing employers to add jobs and to bolster renovation and rehabilitation of vacant structures. The plan would:

  • Add $1.5 million more to the First Wave Closing Fund, which gives state economic development officials leeway in offering incentives to employers considering locations or expansion in Rhode Island. This would bring the fund to $12 million.
  • Add another $500,000 to provide new flights and routes at T.F. Green Airport, an initiative begun last year.
  • Add $10.1 million more to the Interstate 195 Development Fund, which is intended to attract key employers to the lands in Providence made available for development by the movement of the highway. That fund, seeded with $25 million two years ago, has been partially depleted with the anticipated movement of Wexford Science & Technology to two parcels. State Commerce Secretary Stefan Pryor told reporters more applicants are interested in available lands.
  • Maintain the $20 million annual appropriation for Rebuild Rhode Island, which provides a tax credit for developers to spur real estate redevelopment.

In other initiatives, the budget would seek to promote programs that could be employed by advanced manufacturers. They include:

  • A new Manufacturing Tax Credit, seeded with $3.25 million, which would allow manufacturers to obtain a tax credit for investing in new equipment or by adding jobs.
  • A new Workplace Learning Stimulus Package, initiated with $2 million, which would be a job incentive program for advanced manufacturers that are expanding jobs, distributed through a competitive process.
  • Expansion of the existing Innovation Voucher program, adding $1.5 million more to the program with a new focus on manufacturing research and development efforts.
  • An additional $300,000 for the Polaris manufacturing organization, to provide lean training, facility layout and other programming for manufacturers.

The budget contains no broad-based tax increases, but in addition to the proposed application of the state sales tax to internet sales, it would boost the cigarette tax to $4.25 per pack, a move that the governor estimates will generate $8.7 million more annually.

Several initiatives will likely impact small and mid-sized business. They include a proposal to increase the minimum wage by 90 cents, to $10.50, beginning Oct. 1. The move, if approved, would bring Rhode Island between the current wages paid to hourly workers in Massachusetts and Connecticut.

Raimondo has also pledged to introduce a proposal which will require employers of hourly employees to provide paid sick leave. The details are still being determined, according to her chief of staff, Michael Raia, but the proposal is expected to be introduced to the General Assembly within weeks. It was not included as part of the budget release because it does not have budget implications. The plan would be modeled after a recent program adopted in Massachusetts.

No posts to display