PROVIDENCE, R.I. (WPRI) – Democratic Gov. Gina Raimondo begrudgingly signed the fiscal 2019-20 state budget into law on Friday, even as she slammed the General Assembly for putting together a plan that “unwisely takes our foot off the gas at a critical point in our comeback.”
Raimondo put her signature on the nearly $10 billion tax-and-spending plan five days into the new fiscal year. The second-term Democrat said she was frustrated many of her budget initiatives – including some economic development incentives – did not earn the full support of the Assembly, which she made clear in a letter to leadership.
“By cutting our innovative and effective new economic development tools, our progress is put at risk,” Raimondo wrote in the letter.
Her decision came two days after Moody’s Investors Service issued a report pointing out that seven states, including Rhode Island and Massachusetts, were beginning the fiscal year without an enacted budget, which the ratings agency described as a sign of “governance weakness.”
Moody’s also noted it was the second time since 2013 that Rhode Island has started the fiscal year without an enacted budget.
In the letter, Raimondo first lauded state lawmakers for taking “important steps forward for Rhode Island.” She thanked them for partly supporting her push for universal Pre-K, increasing funding by $5 million for English language learners and enshrining parts of the Affordable Care Act – also known as Obamacare – into state law.
But her tone swiftly hardened, as she criticized Assembly leaders for shifting funds and “shortsighted changes” to two of her hallmark economic development programs – Real Jobs Rhode Island and the Qualified Jobs programs.
“Weakening these two initiatives runs the risk of putting the brakes on our economic momentum,” Raimondo wrote.
She went on to blast the Assembly’s decision to create its own new tax-incentive program designed in part to benefit out-of-state investors, which she warned could increase the state’s structural deficit. The program – which she estimated could cost taxpayers $42 million – is structured differently from the economic development tools first proposed by Raimondo four years ago.
“We created a new way of investing in economic development – with taxpayer protections, transparent process, and professional evaluation,” Raimondo wrote. “This new program does not do this and I am concerned it returns us to the old way of doing things.”
Assembly leadership shot right back.
In a joint statement, House Speaker Nicholas Mattiello and Senate President Dominick Ruggerio said they were pleased the governor signed what they called a “pro-business, pro-education budget.” The two Democrats said they were unsurprised by some of the governor’s reaction, but insisted they had spared Rhode Island businesses “costly new taxes the governor had sought to impose.”
“The General Assembly’s budget does impose greater accountability on the executive branch to curb overspending and encourage fiscal discipline while being responsive to health and safety concerns. As we continue to address the structural deficits, it is imperative that we get hiring and spending practices under control. Given recent management failures, it’s not surprising that these important measures would be met with such resistance from the governor,” the two Democratic leaders wrote.
The lawmakers also pointed to what they recognize as achievements, including the continued phaseout of the car tax — Mattiello’s top priority — along with the rejection of a proposed Medicaid tax on large employers, expanding the state’s medical marijuana program and bolstering taxpayer-funded incentives to help New York developer Jason Fain could build what would become the state’s tallest high-rise in downtown Providence.
The lawmakers also highlighted the approval of up to $200 million in bonds to fund the reconstruction of the Providence viaduct that carries Interstate 95 through the downtown, along with the decision to move forward with the reissuance of license plates — as required by law — which was opposed by Raimondo.
The governor’s other complaints detailed in the letter included the lawmakers’ decision against legalizing recreational marijuana as well as requiring legislative review for pot regulations; and a restriction on payments for additional staff, contracts and purchases requested by a state agency that is on track to run a deficit in the current fiscal year.
The governor and advocates have expressed concern that state agencies which repeatedly run deficits each year — such as the Department of Children, Youth and Families — will be unable to provide adequate services if caseloads spike unexpectedly. Lawmakers say DCYF will still have the power to overspend in an emergency, and noted that neither the governor nor the agency’s director ever requested higher funding than proposed.
In Friday’s letter, Raimondo lamented Rhode Island’s “unfortunate distinction” as one of the few states where the governor does not have a line-item veto, which would allow her to strike individual spending items from the budget without rejecting the entire document.
She said a line-item veto is the “best tool to increase transparency and protect taxpayers from unnecessary and unwise spending,” and she hopes to convince the General Assembly to put a constitutional amendment on next year’s ballot to allow it.
Despite the frustrations detailed in her letter, Raimondo said she couldn’t do anything but give the budget her seal of approval.
“Given the urgency of our shared mission to improve education and move Rhode Island forward, I cannot in good faith take action that would delay our progress,” she said.
The budget makes no changes to Rhode Island’s income, sales or corporate tax rates, though it does include a number of small increases and decreases for taxpayers, including adding the sales tax to digital downloads but removing it for feminine hygiene products.
Ted Nesi contributed to this report.