RI lawmakers now facing a $134M budget hole

RI State House May 2016_304270

PROVIDENCE, R.I. (WPRI) – Rhode Island leaders got more bad news on Thursday as fiscal experts confirmed a $134 million hole has opened up in the 2017-18 budget proposal that the governor put forward in January.

The main culprits are $100 million less than expected in revenue and overspending by state agencies, mostly for social services, according to Sharon Reynolds Ferland, the House fiscal adviser, who detailed the red ink at a Finance Committee hearing. At least $26 million in extra costs were tied to the problem-plagued new UHIP computer system. Business tax revenue is also down.

While the numbers can be hard to follow, the simple summary is this: in January, Gov. Gina Raimondo proposed a $9.3-billion tax-and-spending plan for the 2017-18 fiscal year, which starts July 1. Her proposal was a balanced budget, as required by the state constitution, based on forecasts at the time.

Now, though, updated forecasts show there is $134 million less to spend than she expected – putting the budget out of balance, and leaving lawmakers with hard choices to make in the coming weeks to close the gap.

“It’s disappointing,” House Finance Committee Chairman Marvin Abney, D-Newport, said after hearing the numbers.

“Bad news,” agreed Rep. Kenneth Marshall, a Bristol Democrat and vice-chair of the committee.

Attention immediately turned to what the worsening picture means for this year’s two highest-profile budget initiatives: Raimondo’s proposal for two years of free college tuition, at a cost of $10 million in its first year and $30 million in its fourth, and House Speaker Nicholas Mattiello’s proposal to eliminate the car tax, which will cost about $220 million once fully phased in six years from now.

Raimondo’s tuition plan has faced resistance in the House from the start, particularly from Mattiello. While leading House Democrats declined to say the plan was dead on Thursday, their comments suggested it may be on life support.

“Nothing’s out of the picture,” Mattiello said. “Everything’s always in play. We all value higher education.” But “realistically,” he continued, “new programs and proposals are going to be very difficult to accomplish.”

Asked whether the tuition plan isn’t happening this year, Abney said: “I don’t know that it’s the death knell. I do think all of us need to be realistic.”

State Rep. Deb Ruggeiro, a Middletown Democrat and Finance Committee member, added that lawmakers’ focus would now be on “shoring up the programs we have before moving onto new adventures.”

Raimondo told reporters earlier this week she still hoped some version of the tuition plan would get approved. “I know the budget is tighter so we have to get more realistic, but I’d like to try to find a way to maintain the investments we’ve created and continue to make investments,” she said.

Mattiello has already amended his car tax plan, which was originally supposed to be a five-year phaseout, to deal with weaker revenue and complications he learned about after studying the issue. But he said he was heartened by what rank-and-file Democrats told him during a closed-door caucus Thursday.

“There was a lot of support for the car tax proposal,” he said. “They were expressing what they hear from their constituents.”

Lawmakers were also reported to have expressed concern during the caucus about how Raimondo’s budget proposal could impact nursing homes, hospitals and certified nursing assistants. The governor proposed $46 million in Medicaid cuts back in January as part of her plan to balance the budget.

“My colleagues have indicated that restoring some of those resources is a priority,” Mattiello said.

Ruggeiro echoed the speaker, saying that looking out for “vulnerable constituents” came up repeatedly in the caucus. “I always say the budget is the conscience of the state and it shows where our priorities are,” she said.

It’s also unclear how much interest most lawmakers have in approving the PawSox ownership group’s proposal, unveiled this week, to build a new stadium in downtown Pawtucket, funded in part with $38 million from taxpayers. City and team leaders still haven’t finished drafting formal legislation detailing the ballpark deal’s terms, and while Raimondo and Senate President Dominick Ruggerio have welcomed the proposal, Mattiello has given it a frosty reception.

Mattiello said he still hopes the General Assembly can wrap up this year’s legislative session by the second or third week of June, and reiterated his promise that there will be “no late-night sessions” at the end as in years past.

“Doesn’t matter how many days we’re here,” he said.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

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