8 things to watch when RI lawmakers release the state budget tonight

PROVIDENCE, R.I. (WPRI) – It’s one of the biggest days of the year at the Rhode Island State House.

At some point Tuesday evening, the House Finance Committee will unveil – and immediately approve – a nearly final version of the state budget for the 2016-17 fiscal year, a 12-month period that starts July 1.

It’s the first time the public will get a chance to see the compromise worked out during months of closed-door talks between Gov. Gina Raimondo, House Speaker Nicholas Mattiello and Senate President M. Teresa Paiva Weed. (Raimondo made her opening bid in February when she unveiled her budget proposal for the year.)

While the exact contents of the budget won’t be known until the committee publishes it at some point after 5 p.m., some things can already be said based on past experience. The tax-and-spending plan will almost certainly be approved nearly in tact sometime next week. And it will likely come in around $9 billion, setting a new high for annual state spending.

State House insiders will be paying close attention to what lawmakers decided to do on some hot-button issues – here are some of those key things to keep an eye on. (For full coverage of the budget tonight, visit WPRI.com and tune into Eyewitness News on WPRI 12 and Fox Providence.)

Taxes

The first question most people usually have when the budget comes out: are my taxes going up?

The good news is state leaders have already made clear they won’t raise any broad-based taxes in the new budget (such as the sales tax or the income tax). Smokers have more to worry about: Raimondo proposed increasing the cigarette tax by 25 cents to $4 a pack, which officials say would still leave the average price lower than in Massachusetts; it’s not clear if the General Assembly will agree.

However, the focus in budget negotiations has also been on cutting taxes. Mattiello, a strong proponent of tax cuts, has made clear he is leaning toward a tax cut on military pensions. But the Senate has been somewhat resistant toward his push for other cuts elsewhere, so there’s still some doubt about what they will finally agree on.

Rhode Island employers are in line for a sizable tax reduction: Raimondo has proposed a restructuring of the state’s unemployment-insurance tax rate, which for years has ranked among the highest in the country, which it’s estimated would save businesses roughly $30 million in its first year.

Commerce RI

For the second year in a row, Raimondo is proposing to spend significant sums, mostly through Commerce RI, on business incentives and other programs she hopes will spur economic development. (Commerce RI was known as the R.I. Economic Development Corporation before it was renamed after the 38 Studios bankruptcy.)

In 2015 lawmakers went along with just about everything Raimondo asked for, but they may not be as compliant this year; some legislators have signaled frustration that they aren’t seeing more tangible signs of success from the money appropriated last year. Raimondo and her aides counter that it took months to get the programs up and running, and they need more time to succeed.

A major reversal in the money allocated to Commerce RI still looks unlikely, but don’t be surprised if Commerce Secretary Stefan Pryor is denied at least some of his requests, or at least finds new restraints placed on how the agency doles out its resources.

Tourism

At this point, just about everyone in Rhode Island has heard about – and laughed at – the “Cooler & Warmer” tourism slogan debacle. But the fallout from that mess isn’t over for Raimondo yet.

House lawmakers in particular have signaled some skepticism about how the Raimondo administration is managing the new $5-million statewide tourism campaign, notably at a recent hearing of a special commission on the issue. There is widespread speculation that lawmakers will slap Raimondo on the wrist over the affair by reducing the budget for the statewide campaign and redirecting some funding to the local tourism bureaus. That said, legislative leaders will probably stop short of pulling the plug on the campaign altogether.

Medical marijuana

One of the most controversial aspects of Raimondo’s February budget proposal was a suite of changes to how Rhode Island regulates and taxes medical marijuana.

New rules proposed by the governor would step up regulation of medical marijuana, including by licensing cooperative cultivators and tagging individual plants, as well as by reducing the maximum number of plants individual patients can grow for themselves from 12 to six. Those changes and new fees attached to them were projected to generate $10 million in annual revenue.

But the proposal led to a fierce backlash from patient advocates, who said it was unfair to seek so much new revenue from a relatively small group of people suffering from illnesses. Legislative leaders have suggested they’re listening to those concerns; one possible compromise could see them going along with the additional regulations while sharply cutting the additional revenue.

Education

Like Gov. Lincoln Chafee before her, Raimondo has used her budgets to steer large amounts of additional state funding into education. Among the proposals this year: full funding of the state’s K-12 education formula, an expansion of state-funded pre-K, free SAT exams for every high school student, and more professional development for teachers and principals.

Money is also central to the ongoing fight over charter schools in Rhode Island. Raimondo, a charter advocate, tried to find a middle ground in her budget proposal by steering some dollars currently allocated to charters back to the traditional public-school system. But it’s not clear if that will be enough to mollify the many critics of the charter system in the General Assembly.

Separately, Raimondo has proposed giving principals new authority to create “empowerment schools” with additional powers over issues such as the length of the school day. But teachers’ unions are wary of the proposal – which Raimondo defends as modeled on successful efforts in Massachusetts – and it’s again unclear how strong the appetite for K-12 changes is among rank-and-file legislators.

Community-service grants

There’s not much suspense on this one, since it was announced Monday.

Mattiello and Paiva Weed said the budget will do away with the existing system of community-service grants, which are more than $11 million in taxpayer money allocated by lawmakers to dozens of specific groups. The reason is largely the controversy surrounding former House Finance Committee Chairman Ray Gallison, whose salary at a private nonprofit he ran was paid out of more than $2 million in such grants handed out over the years.

In place of the current community-service grants will be specific line items in the budget for a couple dozen of the groups, such as Crossroads, and new pots of money that will be allocated by state agencies at their own discretion. The list of groups given line-item appropriations won’t be known until the budget is released Tuesday.

However, despite protests from critics, legislative leaders will not be touching the better-known type of legislative grants, a roughly $2-million program that allots money to organizations such as little leagues at the discretion of the two leaders.

Borrowing

With 2016 being an election year, Raimondo has a pricey wish list of projects she wants voters to approve borrowing for at the ballot box this November. The total tab: $230.5 million.

The four bond referendum proposals put forward by Raimondo are: $70 million to rebuild piers at Quonset; $45.5 million for higher education, including a $20-million competition to build one or more innovation campuses; $40 million each for affordable housing and school construction; and $35 million for environmental and health funding.

But Assembly leaders may have their own borrowing ideas, so it’s possible some of Raimondo’s suggestions could be scaled back or swapped out. One additional one already on the agenda: a fast-moving proposal to let ProvPort borrow $20 million.

Surprises

The House Finance Committee hearing where the budget is released always turns into quite a scene, as aides rush in with just-printed copies of budget legislation for committee members to try and review before they quickly vote, and lobbyists scramble to obtain copies and see how their clients’ interests fared.

With hundreds of pages of legislation in play, there are almost always some unexpected moves contained in lawmakers’ final budget proposal – a classic recent example being the inclusion in 2012 of language that unexpectedly merged the state’s education boards into one. So don’t be surprised if a measure or two revealed Tuesday night comes somewhat out of left field.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He writes The Saturday Morning Post and hosts Executive Suite. Follow him on Twitter, Facebook and Instagram

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