PROVIDENCE – The Senate approved a $13.1 billion fiscal 2022 state budget late Thursday by a vote of 30-7 that leaves untouched $1.1 billion in federal stimulus aid the state will be receiving from the American Rescue Plan Act.
It is the same budget that was passed by the House on June 24, and about $2 billion more than the budget proposed by Gov. Daniel J. McKee on March 11. The budget will now be sent to the governor’s desk for his consideration.
The spending plan “will reduce our structural deficit, invest in our infrastructure, repay the money we used from our rainy day fund, and use the federal funding appropriately for investments like technology throughout government,” said Senate Finance Committee Chairman Ryan W. Pearson, D-Cumberland, in a statement.
House Speaker K. Joseph Shekarchi said, “I am immensely proud of this budget, which addresses important needs in our state, including housing and education, while raising no broad-based taxes. This has been a collaborative effort with the Senate and Gov. McKee, and I want to acknowledge the dedication and hard work of the members of the House Finance Committee, who listened to hundreds of hours of public testimony that was incorporated into a budget that is compassionate, responsible and fulfills the obligations we’ve made to the people of Rhode Island.”
Despite opposition from the business community, the budget taxes Paycheck Protection Program loans greater than $250,000.
The House Fiscal Office said taxation of PPP loans will generate about $47.8 million in revenue for fiscal 2021 and 2022. The bulk of the revenue, about $46 million, will come from the fiscal 2022 tax year.
The budget also taxes individuals who received unemployment payments during the 2020 tax year, running counter to the American Rescue Plan Act, which excluded from taxable income, for qualifying taxpayers, the first $10,200 in unemployment compensation benefits received in 2020.
Rhode Island is one of just a handful of states to tax both PPP loans and unemployment payments.
A top priority for legislature leaders this year has been the state’s affordable housing issue, as the budget includes a new surcharge on real estate sales over $800,000, and creation of the position of state housing czar.
The budget includes more than $250,000 to support a deputy secretary position within the Executive Office of Commerce, which will serve as the state’s lead official to coordinate and facilitate housing production. This position will serve as executive director of the state’s Housing Resources Commission and will be required to provide extensive annual reporting on housing units, affordability, healthy housing stock and housing formation trends for each community, including recommendations to facilitate future development.
The budget includes allocation of $300 million to fund unemployment insurance, and $600 million to fund schools.
The budget increases spending for programs to aid the state’s vulnerable population, including $40 million for the developmentally disabled, and $10 million for the Department of Children, Youth and Families, with authorization to hire a new director at a $200,000 salary. The Rhode Island Works cash-benefit program will see benefits increase by 30%, while expanding eligibility, and $6 million to fund a new Pay for Success program, for providing services to the homeless.
As for tax credits, the budget allocates $20 million to the Historic Preservation Tax Credit program and an additional $10 million for the R.I. Film Commission’s tax credit program.
The budget will also fund the equipping of about 1,700 police officers in the state with body-worn cameras over the next 12 to 18 months at an implementation cost of $3 million, with an annual maintenance cost of $3 million for a five-year implementation period.
Other notable items in the budget include:
- Funding the R.I. Promise program at $7.7 million, hereby making the higher education program permanent. The program provides two years of free tuition at the Community College of Rhode Island to qualifying high school students in the state.
- Budgeting $22.5 million from general revenue to finance the Rebuild RI Tax Credit program, while raising the program cap from $210 million to $240 million to ensure it continues to stimulate business development, retention, and attraction, and create well-paying jobs in fiscal year 2022.
- Funding the Motor Vehicle Excise Tax phase-out in fiscal 2022, to be financed with $139.7 million in general revenue. Under current law, the Motor Vehicle Excise Tax would be eliminated in fiscal 2024.
- Eliminating the annual $10 sales tax permit fee paid by businesses who conduct retail sales, saving businesses across the state an estimated $331,585 in fiscal 2022.
- Providing $3 million for the Real Jobs RI workforce development program.
- Funding the K-12 school system at the funding formula level, increasing the state’s aid to school districts by $34.9 million without raising taxes; while committing approximately $6 million to incentivize childcare providers to offer quality care; and appropriating $200,000 to create a Child Care Assistance Program pilot to assist working parents who are pursuing higher education.
- Allocating an additional $847,000 to the Medication-Assisted Treatment program to offer it on the night of commitment to people whose stays in the Adult Correctional Institutions may not be long enough to support traditional induction into the program.
- And financing the Distressed Communities Relief Program at $12.4 million in general revenue in fiscal 2022.
Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com.
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