RI House passes $8.67B state budget unanimously

Lightning-quick debate on measure that includes business, Social Security tax breaks

The Rhode Island State House in Providence.

PROVIDENCE, R.I. (WPRI) – After an extraordinarily quick and uneventful debate, the Rhode Island House of Representatives’ 75 lawmakers gave unanimous approval Tuesday to a new state budget, with many praising it as good for the economy.

Lawmakers made minor changes to the $8.67-billion budget proposal unveiled last week but left the measure’s main components entirely in tact. The budget, a revised version of Gov. Gina Raimondo’s original tax-and-spending plan, was put together during months of private negotiations as well as public hearings.

“This budget is a collaboration,” House Speaker Nicholas Mattiello declared just before the House’s 63 Democrats, 11 Republicans and one independent voted 75-0 to pass the budget.

“We’re laser-focused on jobs and the economy, and when we put out a pro-jobs, pro-economy budget, the members rallied around it and responded appropriately and supported it overwhelmingly – unanimously,” he told reporters afterwards.

Among other initiatives, the budget creates a suite of new economic-development programs Raimondo has proposed to boost job growth; adds a tax exemption for Social Security benefits; removes sales taxes on energy for business; authorizes a new insurance fee to fund HealthSource RI; reduces Medicaid spending; boosts education funding; lowers the minimum corporate tax from $500 to $450; and green-lights the settlement to end a union lawsuit against the 2011 pension overhaul.

The budget also hikes the cigarette tax by 25 cents, to $3.75 a pack; expands the room tax to non-hotel lodgings such as bed and breakfasts, vacation-home rentals and Airbnb; eliminates surcharges on outpatient services and imaging procedures such as X-rays; increases K-12 school spending by $35.8 million; allocates $20 million for school construction; and creates a new Rhode Island Infrastructure Bank.

“This is a budget that gives a clear shot in the arm to business and sends a clear message that Rhode Island cares about its businesses and is going to create the economy and the environment that enables businesses to thrive and create jobs,” Mattiello said.

The budget keeps Rhode Island’s sales, income and corporate tax rates the same. It does not include the so-called “Taylor Swift” tax on million-dollar second homes or any public support for the proposed PawSox ballpark in Providence.

The House’s overwhelming support for the budget marked a significant political victory not only for Mattiello, a Cranston Democrat who replaced Gordon Fox last year, but also for Raimondo, who took office in January as the first Democratic elected Rhode Island governor since 1992.

“I am grateful for the hard work of Speaker Mattiello and his leadership team that led to tonight’s unanimous vote,” Raimondo said in a statement. “Our focus is on creating jobs and expanding opportunity, and the budget approved by the House is a great start.”

The Senate Finance Committee has set a vote on the budget for Wednesday at 3:30 p.m. From there it could go before the full Senate as soon as Thursday and then, if passed there, to Raimondo’s desk for her signature.

The one-year budget will cover the new 12-month fiscal year, which starts July 1.

Veteran State House observers and the legislators themselves were stunned by the speed of the budget debate, which lasted roughly three hours – the quickest discussion in decades and a far cry from prior years, when budget fights often lasted until dawn. Many credited it to the consensus-building efforts of Mattiello and the governor’s focus on jobs.

Rep. Brian Patrick Kennedy, now in his 14th term and the longest-serving member of the House, said it was by far the fastest budget debate he’d ever experienced. “I’ve never gone home when the sun is still out on the same day,” he said.

Rep. Joe Trillo, a Warwick Republican known for his fiery opposition to budgets in years past, captured the spirit of the debate as he lavished praise on Mattiello in a speech at the end of the debate.

“Is everybody happy with everything? That is never going to happen,” Trillo said. “The bottom line is, when you look at it as a whole it’s a great budget. It’s great for the state of Rhode Island because the state of Rhode Island is headed, finally, in the right direction under your leadership.”

House Minority Leader Brian Newberry echoed Trillo, saying the GOP caucus had decided to work with the Democrats to make progress on its objectives. “This budget is as good as you’re going to get in a Democratic state,” he said, singling out the Social Security, Medicaid and energy tax provisions for praise.

Newberry added: “If you want to be part of the process, you can’t just always criticize.”

Among the few changes made to the budget on the House floor was a change to require lower-income elderly and disabled residents to pay half-fare to ride R.I. Public Transit Authority buses – they currently pay nothing. House leaders said the change would put Rhode Island in line with 48 other states.

One point of controversy was the expansion of the state’s rooms tax to non-hotel lodgings.

An effort by Rep. Antonio Giarrusso, R-East Greenwich, to delay the tax’s expansion until Jan. 1 rather than July 1 failed, as did an attempt by Rep. Blake Filippi, I-Block Island, to let cities and towns waive their 1% share of the tax. Filippi argued it was unfair to finalize the rules just two weeks before the tax needs to start being collected.

There was also an extended back-and-forth over the decision to create a new fee that will fund HealthSource RI, Rhode Island’s state-run Obamacare insurance marketplace. Republicans warned the state was locking itself into a potentially expensive program that still faces uncertainty at the federal level. “We’ll be stuck with this from here until eternity,” Giarrusso said.

Democrats countered by arguing that keeping HealthSource RI is in the best interests of the state, since the agency was designed specifically to address local needs. “We’re trying to have some control over it,” Rep. Arthur Corvese, D-North Providence, said.

Jamie Rhodes, a spokesman for Planned Parenthood of Southern New England, separately praised a last-minute amendment approved by the House that he said “will allow employees of small businesses that claim an objection to covering abortion, to enroll in the HealthSource RI Full Employee Choice program.”

The strongest opposition to the budget overall came from Rep. Patricia Morgan, R-West Warwick, who made repeated efforts to change it. But she declined to formally offer the alternative bridge-funding proposal she’d rolled out Monday due to a lack of support from House leaders.

“Listen, I will fight really hard for the people of Rhode Island and for this state,” Morgan said after the vote. “I’m a strong woman. I’ll take the heat.”

There was no debate on a number of major proposals, including the pension settlement and the Medicaid changes. Lawmakers said afterwards the initiatives were sound and had been vetted in committee.

Mattiello said he hopes the House can adjourn by the middle of next week, but said it’s “a very good possibility” that the chamber will return in the fall to address Raimondo’s proposal to institute a toll on commercial trucks to fund bridge repairs.

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

Perry Russom contributed to this report.

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