RI lawmakers unveil nearly $10 billion state budget

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PROVIDENCE, R.I. (WPRI) — Rhode Island lawmakers late Friday night unveiled a nearly $10 billion proposed state budget for the 2019-20 fiscal year that gives Gov. Gina Raimondo only some of her highest-profile priorities while limiting new taxes and boosting funding for education.

The budget bill — released around 11 p.m. — revises the tax-and-spending plan put forward in January by the Democratic governor and follows months of public hearings and private horse-trading. The new fiscal year begins July 1.

“Our principles in this budget were to make sure the budget was business-friendly, did not impose any new taxes that we felt were onerous to our economy, and we wanted to continue to provide an environment for economic growth,” House Speaker Nicholas Mattiello, D-Cranston, told reporters at a briefing Friday night.

Mattiello said there was limited scope to fund new initiatives because of the state’s ongoing struggle with annual deficits. “We have to be very careful and good stewards moving forward, and we have to look at the out-years,” he said, referring to future budgets. “That’s one of the reasons that we tried to be very judicious in any new programming that we created.”

“Some of those new programs I think have a lot of merit, and I applaud the governor for advocating for them,” Mattiello added. “It just wasn’t the right time.”

The House Finance Committee approved the budget on a 12-3 vote almost immediately after its release, sending it to the full House floor for a debate and vote next Friday. Three Republicans voted no, including House GOP Leader Blake Filippi. Asked why, Filippi said, “I’ve got to read it.”

Additional changes to the budget, sometimes minor and sometimes significant, are usually made by House leadership during the floor debate. Once the budget passes the House it will head to the Senate, which usually makes no further changes before sending it on the governor for her signature.

“I am pleased that so many of the Senate’s priorities have been included in the budget,” Senate President Dominick Ruggerio said in a statement, saying he expected “to work collaboratively with the House on the budget and many other priorities in the closing weeks of the legislative session.”

Here is a rundown of what’s in and what’s out in lawmakers’ budget plan, according to Mattiello and House aides.

Pre-K: The thorniest issue in the final 48 hours of budget talks appeared to be Raimondo’s proposal to begin implementing universal pre-K in Rhode Island, a plan that would cost an estimated $70 million a year once fully phased in. In the end, Raimondo got about $8 million of the $10 million she sought in this budget. Mattiello said the legislature declined to embrace a universal plan due to cost concerns, but said roughly $5 million is provide to replace expiring federal funding for current pre-K classes and about $2.85 million to add 280 “high-quality” pre-K seats. He described that as “an aggressive expansion,” but said the state simply didn’t have the resources” for more — a common theme. Mattiello also emphasized that education funding would increase by about $42 million overall, including full funding of support for English language learners.

• Free Tuition: Raimondo campaigned hard to expand her Rhode Island Promise free tuition program to RIC and to adults at CCRI. No dice — lawmakers rejected both ideas. Mattiello said some additional money was included for RIC to offset its failure to get the boost from Promise, but added pointedly, “RIC has to do some work.” (The existing Promise program at CCRI will remain in place.)

• Marijuana: Lawmakers dropped Raimondo’s proposal to legalize recreational marijuana, ensuring debate over the issue will continue next year. But they did include significant changes in the state’s medical marijuana program, notably the addition of six new compassion centers. Steph Machado has a full report on the marijuana changes here.

• Commerce RI: Another heated topic of negotiation in the final hours of budget talks was over Raimondo’s trademark economic development incentives. She had sought to boost the authorization for Rebuild RI property-development subsidies from $150 million to $250 million. Lawmakers boosted it to $200 million, but with a notable catch — the sales-tax exemption for building materials, which is sometimes handed out along with Rebuild RI credits, will now count toward the cap. “We’re going to keep it on a shorter lease,” Mattiello said. Commerce Secretary Stefan Pryor was said to be unhappy with that move, arguing it would significantly limit the agency’s ability to subsidize big projects.

• Car Tax Phaseout: No surprise — the third year of Speaker Mattiello’s trademark policy will happen as scheduled. (To save money, Governor Raimondo had proposed a smaller cut than originally scheduled in 2019-20.)

• Taxes and Fees: The budget put forward by lawmakers makes no changes to Rhode Island’s overall sales or income tax rates, following Raimondo’s original plan. They also rejected a number of Raimondo’s proposed revenue-raisers, including her suggestions of a new Medicaid fee on large employers or new taxes on business services, guns, hotels and cigarettes. They did agree to extend the sales tax to downloads of videos, music and e-books (yes, including Netflix). On the other side of the equation, lawmakers agreed to exempt tampons from the sales tax and decided to stop taxing funeral urns.

• URI Board: This was an unexpected last-minute addition to the budget, and a top priority for Speaker Mattiello. URI President Dr. David Dooley has been saying for years he thinks the state’s flagship university would be better served by having an independent board of trustees, rather than sharing a state council on higher ed with RIC and CCRI. With Mattiello on board, Dooley looks set to get his way, despite protests from those who say such a significant change in governance for URI should be vetted much more thoroughly rather than stuffed into the budget.

• 195 District: In a surprise move, Ruggerio’s controversial bill to remove Providence’s municipal authority over zoning in the I-195 Redevelopment District was included in the budget. Mayor Jorge Elorza and a number of community groups strongly oppose the idea, but legislative leaders say they think the city has been too much of an impediment to development. The Senate president was spurred to introduce the bill by city leaders’ hostility to the Fane tower project.

• Opioid tax: Another Ruggerio priority in the budget. About $5 million will be raised from a new tax on manufacturers and distributors of opioids by assessing a fee based on their market share. Rhode Island would be the fifth state to impose one. The money will be put into an opioid stewardship fund designed to help address the crisis. Exemptions are included for hospice care, anesthesia, epidurals, and medications that treat addictions.

• E-911 Fees: Bowing to a growing public backlash, legislative leaders’ budget reduces the E-911 fee from $1 to 50 cents and directs the money into a restricted receipt account, complying with federal regulations. The lost money would be recouped by creating a new monthly surcharge of 50 cents on landlines and 75 cents on mobile phones that would go into the general fund. Mattiello noted that the revenue would help defray some of the roughly $100 million per year the state spends on public safety. The budget also includes $220,000 to train 911 operators in medical dispatch.

• Hospitals and Nursing Homes: Lawmakers’ budget gives nursing homes the same 1% increase in their rates that the governor proposed. It also adds additional money for hospitals, though funded through the hospital license fee, Mattiello said.

• License Plates: The long-delayed plan to make Rhode Islanders get new license plates will finally be put into effect, with a charge of $8 per set of plates. Mattiello said the $8 charge will be enough to cover the cost.

• Miscellaneous: Lawmakers rejected Raimondo’s proposed cut to municipal PILOT aid; her proposal for renovation of the SuperMax prison; her proposal to make nonprofits pay property taxes on some buildings; many of her proposed “scoops” from quasi-public agencies; and her proposal to increase the minimum wage. The budget does include RIDOT’s request to borrow $200 million for the I-95 Viaduct project. It also includes Raimondo’s proposal to reinstate the penalty for not buying health insurance and directs it toward a reinsurance program. Her proposed reforms to injury-on-duty pay for sheriffs made the final cut, as well. House Majority Leader Joe Shekarchi’s proposal to help owners of “pass-through” businesses work around the new $10,000 cap on federal deductions for state and local taxes is also included.

More In-Depth Budget Coverage

Ted Nesi (tnesi@wpri.com) is WPRI 12’s politics and business editor and a Target 12 investigative reporter. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook

Steph Machado and Eli Sherman contributed to this report.

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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