House budget of $10B tosses new taxes, spending sought by governor

THE HOUSE FINANCE committee has introduced a budget proposal that included about $10 billion in state spending. / PBN FILE PHOTO/PAM BHATIA

THE HOUSE FINANCE committee has introduced a budget proposal that included about $10 billion in state spending. / PBN FILE PHOTO/PAM BHATIA

PROVIDENCE — The House finance committee late Friday approved a nearly $10 billion state budget for the upcoming fiscal year that rejects many of the new tax and spending proposals sought by Gov. Gina M. Raimondo.

The $9.97 billion spending plan doesn’t include an expansion of the Rhode Island Promise program, although it fully funds the two-year, free-tuition option this year at the Community College of Rhode Island.

The plan also rejects the governor’s proposed legalization of recreational marijuana, although the budget includes funds for six new “compassion centers,” where authorized residents can purchase medical marijuana.

Several targeted tax increases and programs designed to generate revenue, which were included in Raimondo’s budget in January, have been removed entirely.

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They include a penalty applied to large companies that do not provide health insurance for their Rhode Island employees, who are enrolled in the state-supported Medicaid program. The Medicaid assessment program would have charged companies up to 10 percent of an employee’s wages annually, and was designed to help the state recoup the costs of providing health insurance. It was opposed vigorously by business organizations, although it would only have applied to companies with 300 or more employees.

The fiscal 2020 budget, unveiled by House leadership after several days of negotiation, will now advance to the full House. A vote is expected June 21. The budget is for the fiscal year that begins July 1.

In a statement released Friday, House Speaker Nicholas A. Mattiello, D-Cranston, described the budget as a pro-business, pro-consumer package. “We are fully funding the essential programs our state provides to its citizens, particularly education, and keeping our commitments without instituting new taxes or plunging our state into unjustifiable debt,” he said.

House Finance Committee chairman Marvin L. Abney, D-Newport, said the proposal would keep the economy of the state “stable and strong for the future to come.”

In other changes:

  • The proposal does not include the governor’s proposed increase in the minimum wage. Raimondo had sought an increase of 60 cents, to $11.10 an hour
  • The budget restores $21 million in state aid to cities and towns. The governor had proposed a cut in state aid, which was intended to encourage communities to seek additional tax revenue from nonprofits using land for commercial purposes. That expansion of the PILOT has also not been included in the spending package
  • The proposal eliminates an expansion of the state sales tax to professional services such as lobbying, building maintenance and landscaping services. It retains a proposed expansion of the sales tax to digital downloads and streaming services, such as the Netflix streaming service

Legislative priorities that have advanced through both houses in recent weeks have been included in the budget documents.

This includes a planned continuation of the automobile excise tax phase-out, which Mattiello has made his priority. The governor had proposed a reduced phase out this year. If the legislative budget is approved, the phase-out will be complete after 2023.

The budget includes legislation sponsored by Senate President Dominick J. Ruggerio, D-Providence, which would allow creation of special economic development districts on state-owned lands. The move is intended to help bolster economic activity and bypass local zoning oversight.

In education priorities, the budget includes legislation to create a 17-member board of directors focused on the University of Rhode Island, which is now folded under the auspices of the state Council on Post-secondary Education. This change is sponsored by Mattiello.

The state budget will fully fund the state education aid formula, increasing direct aid by $34 million over the current fiscal year.

It provides additional funds to expand pre-K classrooms, adding $2.9 million for another 270 seats. This is an expansion of the 1,080 seats now funded by the state, but short of what Raimondo had sought in a push for statewide availability.

Raimondo’s budget had sought $5.3 million more for expansion of the Rhode Island Promise scholarship to Rhode Island College, as well as to adults who wanted to continue their education at CCRI.

Mary MacDonald is a staff writer for the PBN. Contact her at