$6.89B House budget plan heads to Senate

PROVIDENCE – The House of Representatives last night unanimously approved a $6.89 billion budget for fiscal 2009 that calls deep cuts in education and human services but no increase in personal income taxes.
“It’s a huge win for Rhode Island taxpayers,” Gov. Donald L. Carcieri said in a statement after the bill’s passage.
The budget plan – expected to go before the Senate tomorrow – aims to slash state spending by $85 million compared with the current fiscal year. Those savings would be achieved through increases in fines for traffic violations; a reduction in the number of state employees, in part through attrition; a $15 million cap on the state’s movie-production tax credit; and deep cuts to health and welfare programs, including a $67 million Medicaid reduction that would require a federal waiver.
The House plan would soften the blow for some social programs the governor had targeted:
• Head Start, the much-praised early-intervention education program for at-risk children, would be cut by 154 children instead of the 400 the governor proposed.
• Aid to the school breakfast program would face a cut of about $300,000, or half what Carcieri suggested paring from the program.
• Adult health care coverage under RIte Care, the state insurance program for needy families, would be slashed by 1,000 adults rather than 7,400.
But it also would lower the income ceiling for RIte Care to 175 percent of the federal poverty level from the previous 185 percent. (For a family of three, the limit would drop to $30,800 from the previous $32,500.) And to cut prescription costs, it would require the use of generic alternatives whenever available.
And the budget plan would slash welfare eligibility from the previous limit of five years (60 months) to no more than 24 consecutive months in any 60-month period. The House measure also would impose a lifetime total cap of 48 months, although it would allow a 12-month extension to those who have reached the 48-month limit if they are employed.
The plan also calls for a $91 million reduction in state personnel expenditures. Some of those savings are expected to come from a surge of retirements, due to upcoming changes in health benefits for retirees; others have yet to be negotiated with state employee unions.
In addition, judges hired after the end of 2008 would receive a smaller pension – 70 percent to 90 percent, depending on the length of service, rather than the current 75 percent to 100 percent – that would be further reduced for judges who opted for spousal benefits to continue after their own death.
Medical and dental insurers would face a 40-percent increase – to 1.4 percent, from the current 1 percent – in the state tax levy on customer premiums. That increase would raise an estimated $5.6 million.
The state’s public college system would face $17 million in budget cuts, while funding for need-based scholarships would be slashed by another $2.6 million.
Not every category faces cuts under the House measure, however. The plan calls for the state to issue $87 million in transportation bonds, although it would eliminate $35 million in open-space bonds and $15 million in clean-water bonds.
Aid to cities and towns would remain at the current, reduced level. And a new provision, sought by local leaders, would bar municipal contracts from requiring the use of a specific health care provider – a change intended to enable communities to use whichever insurance provider is least expensive.
Education aid to local school districts would rise by $13.6 million, money to come from the state’s recent approval of 24-hour gaming.
And payments to local hospitals and community health care centers for uncompensated care would rise by $9.6 million and $1.2 million, respectively.
The Senate Finance Committee was slated to hold a hearing on the measure today; the full Senate is expected to vote on the budget plan tomorrow.
“I expect that this year may be remembered for decades as a defining moment in the history of our state,” Carcieri said.
“This budget represents a watershed moment in the recent history of Rhode Island state government: In the face of a severe fiscal crisis, we have worked together to reduce spending and balance the budget without raising taxes. … From welfare reform to Medicaid redesign, we are fundamentally changing the way state government operates. By reforming how municipalities purchase health insurance, we are also helping to save millions of dollars for cities and towns,” he said.
“I hope that the state Senate will join with me and the House in approving this important plan for Rhode Island’s future,” Carcieri added.
The House budget plan has drawn praise from local business leaders. (READ MORE)
Its cuts to education, however, drew sharp criticism from Rep. Edwin R. Pacheco, D-Burrillville and Glocester, who has drafted an amendment that would erase the $2.6 million cut in need-based scholarships for Rhode Islanders, replacing it with a $400,000 increase. His proposal would take the money from the Judiciary budget. He also has drafted separate amendments that would further limit judicial pensions and bar the state from buying any new vehicles, unless they were purchased solely with non-state money.
“Especially at a time when the economy is faltering, access to education is a vital tool for success for individuals as well as for the economy as a whole,” said Pacheco, a former Burrillville School Committee chairman. “Higher education is an economic driver pointing Rhode Island in the direction necessary for success.”
The latest news and information from the R.I. General Assembly are available at www.rilin.state.ri.us. News from the R.I. Governor’s Office is available at www.ri.gov/governor.

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