Raimondo will unveil her first RI budget Thursday night

Gov faces shortfall north of $200M; Medicaid may be on the chopping block

PROVIDENCE, R.I. (WPRI) – Four months after Rhode Island voters entrusted her with the state’s highest office, on Thursday night Gov. Gina Raimondo will unveil her biggest proposal of the year: the state budget.

Raimondo will reveal the details of her tax-and-spending plan, which covers the state budget year that begins July 1, with a televised address to both chambers of the General Assembly at 7 p.m. Her office isn’t calling the speech a State of the State since she just delivered an inaugural address upon taking office in January.

The governor’s office has already dubbed the document the “Raimondo JOBS Budget,” leaving no doubt the first-term Democrat will keep emphasizing that her administration is focused on increasing employment in Rhode Island, which has been grappling with higher-than-average unemployment since 2007.

Raimondo gave an advance preview of the budget’s education initiatives Wednesday, announcing it will include a $10-million “last-dollar” scholarship program to help students pay for college, as well as a $1.75-million program to forgive college loans for entrepreneurs and a new $1.3-million Prepare RI program to let high schoolers enroll in college classes.

In a statement, Raimondo described the college proposals as “investing directly in people to give them a ladder of opportunity, and it’s also an economic driver for our state.” She added: “My jobs budget will invest in each rung of the ladder – our schools, college affordability, and workforce training for adults.”

Budgets are arguably the most telling policy proposals put forward by elected leaders, forcing them to translate their campaign rhetoric into dollars and cents, and to make hard choices between competing priorities. And Raimondo faces a variety of challenges as she rolls out her first budget.

The first is red ink. Rhode Island is on track to run a $27-million deficit in its $8.7-billion budget for the current fiscal year, which ends June 30; on top of that, the most recent projection puts the next budget year’s shortfall at $190 million.

That means Raimondo needs to close a roughly $217-million gap between revenue and expenses. The governor said last month the budget will propose “strategic cuts,” though she declined to elaborate on them, to help balance it.

Those deficits are projected to grow even larger in the coming years, as new casinos in Massachusetts steal customers – and tax dollars – from Twin River in Lincoln; gambling is Rhode Island’s third-biggest source of revenue. Analysts forecast the state’s annual budget deficit will hit nearly $500 million by the 2018-19 budget year.

The deficits are also being driven by increased spending on Medicaid, the state-federal health care program for low-income Americans, which was expanded last year as part of President Obama’s health law. Raimondo convened a task force last month to come up with solutions for reducing Medicaid costs, with their first set of proposals due April 30.

The thousands of pages in Raimondo’s budget will touch on a wide range of other programs and policies. House Speaker Nicholas Mattiello has said he expects it to include a tax cut on Social Security that he’s been promoting; it should also answer how Raimondo wants to pay for HealthSource RI, the state-run Obamacare exchange.

Another major challenge is Rhode Island’s ongoing economic weakness.

The state’s employers had 479,300 jobs on their payrolls as of December, which was still roughly 16,000 fewer employees than they had before the Great Recession, according to the R.I. Department of Labor and Training. The steady erosion of Rhode Island’s manufacturing base – which Raimondo has pledged to reverse – has left the state increasingly dependent on its colleges and, especially, hospitals for job growth.

At a news conference last month Raimondo cited statistics such as those to argue Rhode Island’s economy is “stuck in neutral,” and indicated her budget will be focused on igniting a “comeback.” Among the possible solutions she floated: increased spending on tourism and economic development, and more public subsidies for real-estate development.

A third challenge Raimondo faces is political.

The new governor won office with only 41% of the vote last November; her team wants to build a broader base of support as she looks ahead to a re-election campaign in 2018. She is also the first Democrat elected governor in 24 years, and is still learning to navigate her relationship with 113 lawmakers – nearly all of them Democrats – who get the final say on the budget when they pass it in May or June.

Raimondo only has to look to her predecessor to see how much damage a botched budget rollout can have on a young administration. Gov. Lincoln Chafee was knocked off balance almost immediately when his first budget called for unpopular tax increases; lawmakers quickly killed it, and low approval ratings forced Chafee out of office after a single term.

Of course, the release of Raimondo’s blueprint Thursday night is just the kickoff for the months-long budget process at the State House. The House Finance Committee, chaired by Bristol Democrat Ray Gallison, will spend the coming months evaluating the governor’s proposals and taking testimony on them.

Luckily for lawmakers, state tax revenue is running $44 million ahead of projections so far this budget year, which could give them more money to use to make the numbers add up by late spring. But Raimondo isn’t allowed to use those rosier-than-expected figures in her proposal Thursday night – she has to use the original, gloomier estimates.

If past practice holds, the finance committee will unveil and immediately approve a revised budget late one evening sometime in late May or June. The budget then will go before the full House, which usually holds a daylong debate before approving it, and from there on to the Senate, before finally reaching the governor’s desk for her signature.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

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