Reactions to Raimondo’s budget mixed

THE WAVEMAKER Fellowship program was first passed by the General Assembly in 2015 as part of Gov. Gina M. Raimondo's Jobs Plan to provide a financial incentive for Rhode Island graduates to stay in-state for a job or to start a business. / PBN FILE PHOTO/ MICHAEL SALERNO
THE WAVEMAKER Fellowship program was first passed by the General Assembly in 2015 as part of Gov. Gina M. Raimondo's Jobs Plan to provide a financial incentive for Rhode Island graduates to stay in-state for a job or to start a business. / PBN FILE PHOTO/ MICHAEL SALERNO

(Updated 4:47 p.m.) PROVIDENCE – Reactions to Gov. Gina M. Raimondo’s first budget – an $8.6 billion budget intended to jump-start the economy – have been mixed.
The budget includes funding for such things as full-day kindergarten by the 2016 school year and establishing a school building authority to focus on school renovations, as well as ways to create a favorable business environment by phasing out the energy sales tax over five years and repealing more than 30 professional licenses considered unnecessary or burdensome. It also includes no broad-based tax increases.
The budget 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.
The budget, which would take effect July 1, would require approximately $91 million in Medicaid cuts and specialized tax increases and assessments to cover what had been a projected $190 million deficit.
LeadingAge RI, which represents nonprofit nursing homes, assisted living facilities, senior housing providers and adult day health centers, released a statement saying it understands that the constraints and challenges facing the Raimondo administration, but called the proposed Medicaid rate cuts of $18 million to nursing homes severe.
“A cut of this magnitude could adversely affect the quality of care that all nursing home residents receive, whether they are on Medicaid or not. That said, we understand the short- and long-term financial challenges to Medicaid, while also recognizing the needs of our growing older population, and look forward to working with the governor and the General Assembly to address our Medicaid budget issues – short-term and long-term and find ways to better allocate our scarce resources to care for the elderly,” the statement said.
Michael R. Souza, president of the Hospital Association of Rhode Island, said the association applauded Raimondo’s commitment to transforming the health care delivery system, but said that hospitals will face $54 million in cuts, unfortunately.
Those cuts, Souza said, “will further destabilize fragile hospitals employing nearly 20,000 health care professionals.”
Meanwhile, Souza said, “We are grateful that the governor recognizes the need for long-term solutions and look forward to working with the Working Group to Reinvent Medicaid to identify changes that will provide Rhode Islanders with quality health care while controlling costs.”

“Our industry is vital to the economy and health of our state. Hospitals provide Rhode Island with more than $6.9 billion in economic activity while caring for patients on more than two million occasions,” Souza said.

William B. Vernon, state director of the National Federation of Independent Business, said they appreciate Raimondo’s focus on jobs, and support the energy sales tax phase out. But he said the group has concerns about the tax on health insurance for small businesses. He said health insurance is a “huge expense” for small business owners, and the tax is “almost cruel.”
“It needs to be more affordable, not less. It’s a tough pill for small business to swallow,” Vernon said.

As the governor’s budget proposal now begins the legislative hearing process, state Rep. K. Joseph Shekarchi and Sen. James C. Sheehan said they intend to push for approval of the “qualified jobs incentive,” legislation they brought forward.
Under the legislation, tax incentives will be made available to companies that hire new, qualified full-time employees who work a minimum of 30 hours per week, with a salary that is at least 250 percent of the state’s hourly minimum wage (approximately $675 for a 30-hour week and $900 for a 40-hour week).
Large companies would be eligible for a .25 percent tax incentive off their net income tax rate for every 50 new hires while smaller companies, which are typically partnerships or family businesses, would receive a .25 percent incentive off their personal income tax for every 10 new hires, provided that the rate reduction is no larger than 6 percentage points for the applicable business income tax rate and no larger than 3 percentage points for the applicable personal income tax rate.
The legislators said they realize that offering tax incentives to companies means less revenue for the state, but believe the possibility of hundreds of new jobs – will result in an overall economic boost for the state.
“Enactment of this qualified jobs incentive program will help ensure that Rhode Island businesses are receiving an incentive for the creation of not just a lot of minimum-wage positions but good-paying, sustainable jobs, the kinds of jobs that will enhance these companies and help them continue to grow and be productive,” Shekarchi said in a statement.
Lt. Governor Daniel J. McKee said Raimondo has laid out “a bold agenda that will stimulate economic development, grow jobs and lay the foundation for Rhode Island’s comeback.”
McKee said the budget maintains current levels of funding to cities and towns. He said it invests in sound infrastructure by fully funding the municipal road and bridge project. And, he said it supports an infrastructure bank for projects that will make state, municipal and commercial buildings more energy-efficient.
McKee said the governor’s budget plan also makes critical investments in education, noting it provides $1.4 million in funding for universal full-day kindergarten in every community next year, and would direct $1 million to more than triple the number of pre-K classrooms in the next few years.
“Gov. Raimondo knows our state can’t be successful without financially sound cities and towns, and she is committed to a robust partnership with them. I encourage members of our General Assembly, municipal leaders and my fellow Rhode Islanders to support this budget as we all work together to build a better Rhode Island,” McKee said.
Some of Raimondo’s proposed revenue generators include increasing the state’s cigarette excise tax by 25 cents per pack, from $3.50 to $3.75 per pack, which would raise $7.1 million in fiscal 2016, and allowing businesses to self-audit, something the state Division of Taxation expects would recover $500,000 in unpaid taxes.

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