(Updated, 3 p.m.)
PROVIDENCE – Gov. Lincoln D. Chafee signed the $7.7 billion fiscal 2012 budget Thursday afternoon, a day after the Senate passed it in a 30-7 vote.
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House Speaker Gordon Fox, Senate President M. Teresa Paiva Weed, House Finance Chairman Helio Melo and Senate Finance Chairman Daniel DaPonte, all Democrats joined Chafee, an Independent, as he signed the budget bill in the State Room at the Statehouse.
The $7.7 billion tax and spending package, approved by the House last week and the Senate Wednesday, discards Chafee’s proposed $165 million sales tax expansion.
“The Senate achieved many of its goals as this budget evolved, including reducing out-year deficits, repaying the rainy day fund, and fully funding the new school aid formula,” said Senate Finance Chairman Daniel Da Ponte, D-East Providence/Pawtucket.
“The budget also restructures how we will finance transportation and enacts reforms to bring our unemployment insurance system back to solvency,” Da Ponte said.
The plan, approved by the House on June 27, closes the state’s initial deficit of approximately $300 million by cutting some programs previously paid for with federal stimulus funds, state department consolidations, as well as a small surplus and higher-than-expected revenue from the previous year, a General Assembly news release said.
The budget discards Chafee’s $165 million sales tax expansion but makes a handful of items subject to the existing 7 percent sales tax, including: pre-written computer software delivered electronically, insurance proceeds, nonprescription medicine and sightseeing package tours.
The legislation also ends refunds of sales tax that some companies get on construction materials through the R.I. Economic Development Corporation and the Industrial Facilities Corporation.
The proposal would come into effect on Oct. 1 and would raise an estimated $17 million in revenue for 2012 and $25 million in 2013.
It calls for a study of combined reporting for corporate taxes, and maintains the film and television tax program.
The budget also includes:
• $78 million in funding reductions to various health care providers in order to deal with a $230 million loss in federal stimulus funding that previously assisted Medicaid-funded health care programs.
• Increases the cosharing requirement for the RIte Care health care program, but maintains the same eligibility requirements. Families, at the 150 to 250 percent of poverty level, are expected to see their coshare increase by about $30 per month.
• Rejects Chafee’s proposal to eliminate the R.I. Pharmaceutical Assistance to the Elderly Program.
• Fully funds the first year of a 10-year phase-in of a new school aid formula adopted by the General Assembly last year. That will amount to $17 million in new funding for elementary and secondary education.
• $5.5 million in additional funding, beyond the governor’s proposal, for communities to offset the expenses of hosting state facilities as part of the Payment In Lieu Of Taxes program.
• Maintains the governor’s plan to increase state beach parking fees.
• $4 million increase for public higher education.
• Includes a provision to ask voters in the 2012 election whether they support tables games at Twin River in Lincoln.
• Freezes longevity bonuses for state employees.
• Consolidates the Department of Elderly Affairs into a division of the Department of Human Services and rolls the Water Resources Board into the Statewide Planning program.
• Leaves a separate Department of Veterans’ Affairs unfunded but funds a director; rejects a plan to require those in the state veterans’ home to pay 100 percent of their income to the home and maintains the current 80 percent fee.
• Includes replenishment of $22 million borrowed from the state’s rainy-day fund last year and plans to reduce the state’s practice of borrowing money annually to pay its share of federal highway construction projects through gradual increases in license and registration fees between 2014 and 2016.
• Aims to make the unemployment trust fund solvent by 2015 by progressively increasing its balance through changes to taxable wages and benefits.
