PROVIDENCE, R.I. (WPRI) – Gov. Gina Raimondo put an exclamation point on the first six months of her tenure Tuesday by signing into law an $8.67-billion state budget that includes many of her top priorities.
“The world should know Rhode Island is a good place to do business, and this budget makes it easier and less expensive to do business,” Raimondo said during a signing ceremony before a crowd of legislators, gubernatorial aides and reporters who packed into the State Room. “It’s time that we change the perception of this state.”
Raimondo, a Democrat, said there were three tenets that guided her in the development of the budget: increase the skills of Rhode Island’s work force, take steps to spur real-estate development, and make it easier and cheaper to live and work in the state.
“Now we’re going to use the tools in this budget to get Rhode Islanders back to work,” Raimondo said, adding that Commerce Secretary Stefan Pryor – her top aide on economic development, who has responsibility for implementing many of the new programs created by lawmakers – is now “under a lot of pressure” to deliver.
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 budget covers a very broad spectrum,” House Speaker Nicholas Mattiello said. “There’s a little in it for everybody.”
The newly signed budget covers the state’s new 12-month fiscal year, which starts Wednesday. Raimondo said her administration’s first priorities once the budget takes effect will be working to implement the various Medicaid changes and drumming up interest from companies to invest in the state.
“We’ve actually already started talking with some real estate developers who are interested in it,” she said.
One downside to state leaders’ budget compromise: despite an uptick in state tax revenue, the Senate Fiscal Office estimates the final product actually increases the size of the projected deficit for the following fiscal year, 2016-17, from $75 million to $125 million compared with what Raimondo originally proposed in March.
“Thats’s always a concern,” Mattiello said Tuesday. “The budget is a balancing of priorities, and you can’t always get the perfect balance you would like, so I certainly don’t like that aspect of it, but we’ll be mindful of it and we’ll work on it next year.”
The speaker said he hopes the “pro-business” elements of the new budget will brighten the long-term budget picture. “I’m hoping when we come back our revenues are actually going to be much higher than anticipated and that we’ll have a better situation to work with,” he said. “But you’ve got to continuously work with and look at that structure.”
Raimondo shared the speaking program at the signing ceremony with both Mattiello, D-Cranston, and Senate President M. Teresa Paiva Weed, D-Newport, who’ve been at loggerheads in recent days over the governor’s truck toll proposal and the messy finale of this year’s General Assembly session.
In different ways, all three leaders acknowledged their disgareements.
“In our tense moments – and let’s face it, there were a few – I think the thing that brought us together, and then led us to a budget that we can be proud of, is when we did put aside our disagreements or our own egos or our own political desires, and said, ‘What’s the right thing to do for the people?'” Raimondo said. “And I can tell you, they did that over and over again.”
“I look at it slightly differently,” Mattiello said. “I think we were all trying to serve the state most appropriately, and we all had good ideas, and I’d say at the end of the day the compromise we put together was pretty good.”
Paiva Weed referenced the tensions when she praised the work of the House and Senate fiscal advisory offices. “The fiscal staffs work incredibly together, and guys, just in case you’re wondering – we know even when we’re not talking, you are,” she said to laughter.
Raimondo also used the occasion to take a final victory lap on pensions, the issue that vaulted her to prominence in 2011 when she spearheaded a sweeping overhaul of the state retirement system as Rhode Island’s newly elected general treasurer. The legal settlement enshrined in the budget locks in most of the savings from the law.
Raimondo called the settlement’s enactment “a loud signal to the rest of this country that Rhode Island and its General Assembly and its public leaders, we’re not afraid to tackle the biggest, toughest issues. We’ve done it.”
“We become now one of the only states in America who’ve had the courage to tackle its pension issue, and who’ve had the compassion to tackle it in a way that did it with dignity for our state employees, and security for all taxpayers of the state of Rhode Island – not for a year or two but for decades to come,” she said.Ted Nesi (firstname.lastname@example.org) covers politics and the economy for WPRI.com. He hosts Executive Suite and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi