RI House approves $9.2B new state budget

Car tax phaseout, free CCRI tuition to start this year; GOP says it's status quo

Mattiello speaks to reporters in mid-June.

PROVIDENCE, R.I. (WPRI) – The Rhode Island House of Representatives on Thursday approved a $9.2-billion proposed state budget that would begin phasing out the car tax and start offering free tuition at the Community College of Rhode Island.

The budget passed on a 64-11 vote that fell along party lines, following a roughly five-hour debate. The tax-and-spending measure had been unveiled and quickly passed by the House Finance Committee last week.

It marks the first time lawmakers have authorized more than $9 billion in state spending for a single fiscal year. A decade ago, in the 2007-08 fiscal year, the budget was just shy of $7 billion.

Democrats praised the budget as a balanced plan that reduces taxes and protects social services while closing a shortfall of $134 million. “It’s a great day,” House Speaker Nicholas Mattiello, D-Cranston, said. “It’s a great day for the House of Representatives, and it’s a great day for the state of Rhode Island, in very difficult times.”

“We’re starting to be recognized from the outside,” he added, “so let’s keep working on fixing our problems, always improving and making sure we keep the economy moving in the right direction to the best economic conditions we can produce.”

But Republicans assailed the budget as a continuation of the status quo that won’t help the Rhode Island economy enough, and in some cases could harm it. House Minority Leader Patricia Morgan, a West Warwick Republican and possible 2018 candidate for governor, argued for bolder cuts in taxes and spending.

“A budget is more than just a way to pay the bills this year,” Morgan said. “It should also be a document that sets a path to … a brighter future for the people of Rhode Island.”

Passage in the Senate – largely a formality – is expected to happen quickly once the Senate Finance Committee meets to vote on the House-approved plan on Tuesday. Once approved by the full Senate, it will go to Gov. Gina Raimondo’s desk for her signature.

Raimondo spokesman Mike Raia said, “She thanks Speaker Mattiello and the entire House for their hard work to pass a budget that protects our priorities that have cut Rhode Island’s unemployment rate from the highest in the nation to a rate that is lower than Massachusetts’s, helped created 13,000 new jobs and given businesses a reason to take a fresh look at Rhode Island.”

The proposed budget keeps Rhode Island’s sales, income and corporate tax rates the same. Among other revenue changes, it funds the first installment of Mattiello’s six-year car tax phaseout; expands the sales tax to e-retail and catalog sales; and hikes the cigarette tax by 50 cents, to $4.25 a pack. It also “scoops” dollars from various sources, including $12.5 million collected from utility ratepayers that had been earmarked for energy efficiency.

Rep. Jay O’Grady, D-Lincoln, noted lawmakers reversed a previous car tax phaseout in 2010 to balance the budget during the recession. “I’m very pleased that seven years later we are finally addressing the issue that primarily brought me here, and I’m sure every other member of the class of 2010 feels the same way,” he said.

On the spending side, the budget allocates $5.5 million to a scaled-back version of Raimondo’s proposal for two years of free tuition at state colleges, limiting the benefit to CCRI starting this fall. That section of the plan triggered a feisty debate. Democrats cast it as a pilot program to help more students get degrees.

“It does fill that middle-class gap who cannot afford it,” said Rep. Deb Ruggiero, D-Jamestown. “To those who think wealthy people will benefit – someone studying marine biology at the University of Rhode Island I don’t think intended to go to CCRI. And those two-year certificate programs in cybersecurity at CCRI are pretty valuable as an on-ramp for jobs.”

Republicans argued the tuition plan still needs more vetting and shouldn’t benefit wealthier residents. “I don’t think there’s too many of my constituents that need free college at CCRI,” quipped Rep. Anthony Giarrusso, R-East Greenwich.

“What does that do to URI and RIC? It hurts them,” said Morgan. “They need those freshmen and sophomores filling their programs, paying the tuition.”

Other budget provisions include two increases in the minimum wage, to $10.10 in January 2018 and $10.50 in January 2019, and the restoration of free RIPTA bus passes for low-income elderly and disabled residents. It also undoes some of the cuts to health care spending originally proposed by Raimondo – who also agreed to find $25 million in undefined savings across state government to make the math add up.

“This was not an easy budget to accomplish, but it is a fair one,” House Finance Committee Chairman Marvin Abney, D-Newport, said after the vote.

Among the amendments that failed were GOP proposals to create an inspector general’s office funded with 9-1-1 fees; to reduce disability pensions for municipal workers who find a new job; to exempt school-construction projects from the requirement to pay prevailing wages; and to eliminate the tangible property tax by cutting R.I. Commerce Corporation spending.

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

Legislative experts estimated the House budget would slightly reduce Rhode Island’s structural deficit – the state’s perennial gap between revenue and expenses – next year. They project it will lower the 2018-19 deficit to $140 million, compared with $151 million under the governor’s January proposal. The yearly deficit would rise to $223 million by 2021-22, versus $194 million under the governor’s original plan.

Those numbers, however, could change depending on the outcome of another legislative discussion happening Thursday – the fight in Washington over Senate Republicans’ newly unveiled proposal to repeal and replace the Obama health law. Experts say the bill would reduce Rhode Island’s federal funding, which makes up roughly a third of the $9-billion state budget.

Mattiello also kept a promise he made earlier this year: avoiding the House’s perennial all-night debates, with final votes taken in the wee hours of the morning. The budget debate began shortly before 3 p.m. and ended by 9.

“The way we used to do business is unacceptable,” Mattiello said, adding: “I want to do business when our citizens can see what we’re doing.”

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