PROVIDENCE – Along with investments in state education and school building, new sources of revenue and continued cuts to health and human services programs underlie the $9.4 billion fiscal 2019 budget introduced by Gov. Gina M. Raimondo Thursday.
The budget anticipates U.S. Supreme Court approval of sports gambling, and Rhode Island is preparing to take part in it fully. The state expects $23.5 million in net revenue if the activity is legalized and established at both Twin River in Lincoln and in Tiverton.
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It includes, as Raimondo pledged in her State of the State Address this week, a request to fund the first year of a $1 billion public school building program. A bond question put to voters in November would seek $250 million to start the program, which would be funded by both local and state taxpayers.
The budget also includes several new programs, including a series of efforts directed at small businesses.
In her fourth state budget, Raimondo directed the budget office to create a document that resolved the $60 million deficit in the current fiscal year, which ends June 30, as well as a $200 million deficit that was projected for the upcoming year, according to Michael DiBiase, director of the R.I. Department of Administration.
But she also set some ground rules, he said, including that the state maintain its competitiveness, control costs, continue to attract and retain employment, and promote modern education and skills for Rhode Island students.
“This is a difficult budget environment,” he said. “The governor wants our students to be competitive. She wants businesses to expand. She wants to get people the help they need. It wasn’t easy in this budget.”
In a briefing for reporters, prior to the release of the budget, DiBiase and other administration officials explained what some of that looks like:
The overall budget, including federal sources, is $9.4 billion. In general fund expenditures, the $3.8 billion budget represents $64.9 million more than the enacted 2018 budget, or an increase of 1.7 percent.
The deficit in the current fiscal year of $60 million was partly the result of lowered state revenues, overspending and higher Medicaid costs, according to Jonathan Womer, the state budget director.
To eliminate it, the state adopted $35 million in spending reductions and recommends a temporary reallocation of state Department of Motor Vehicle fees. The R.I. Department of Transportation which would have received 80 percent of the fees in the current fiscal year would receive 60 percent instead. The full allocation would revert to RIDOT in fiscal 2019.
The budget proposes several new revenue sources. They include:
- $23.5 million from sports betting. This takes into account the expense of setting up the services at the two casinos, which are the only sites authorized for gambling activity in Rhode Island. The state expects to begin Oct. 1, anticipating a favorable Supreme Court outcome to a case that originated in New Jersey.
- $5.1 million through expansion of the state Compassion Centers, where people who are qualified can get medical marijuana. Now capped at three, the state budget proposes they be expanded to 15. Acute pain would be added as an eligible condition for receiving medical marijuana and Connecticut and Massachusetts card-holders could access it in Rhode Island’s centers.
- A new services tax on software services, which would allow the state to collect its 7 percent sales tax on purchases. This would apply to products such as TurboTax and Salesforce. This would mirror policy in other states, including Massachusetts. This is expected to net $4.8 million.
- Extending the sales tax to armored car and security services, expected to net $9.8 million.
The budget includes several reductions in existing services, and reductions to departments individually. They include:
- An $18.2 million reduction in state Medicaid expenses through a redesign of nursing home care and long-term services and supports.
- A $23.7 million reduction to managed care organizations, including a cessation of funds for the 1.5 percent base profit or “guaranteed profit” that they previously received.
- Cutting $14.3 million to hospital support, including eliminating the “upper payment limit” for inpatient services and encouraging hospitals to incentivize outpatient services.
- Requiring non-disabled adults receiving Medicaid to have co-payments for inpatient hospital visits, non-emergency visits to the ER and other services. The per-visit co-pays could range up to $4, according to state officials.
- A $6 million cut to mental health and behavior health services, by reducing residential services and congregate home rates.
Among new programs and investments, the budget proposes:
- A $250 million bond to initiate school construction and renovation of public K-12 buildings. If voters approve the funds, the state would provide a supplement to the existing formula for school construction for individual cities and towns, encouraging consolidation of facilities, science and tech enhancements and other types of construction. The state would spend only $100 million in the first year, to keep under a set cap for indebtedness.
- $1.5 million for graduate medical education that focuses on mental health and underrepresented specialties.
- Launching SupplyRI, a $500,000 program that would encourage large businesses and institutions in the state, including hospitals, to purchase from Rhode Island suppliers.
- Provide $3 million for the state’s higher education institutions to begin to meet standards set by the General Assembly for performance goals.
- $200,000 for child care for low-income college students, allowing them to attend school. The program now is focused exclusively on employment.
- Add $3.6 million to the Rhode Island Promise Scholarship fund to continue it for a second year at Community College of Rhode Island.
Mary MacDonald is a staff writer for the PBN. Contact her at macdonald@pbn.com.
