Legislators paint grim picture of economy, need for federal aid

THE STATE SENATE approved raising Rhode Island's minimum wage to $15 per hour by 2025. But many businesses remain opposed. / PBN FILE PHOTO/NICOLE DOTZENROD

PROVIDENCE – A tax hike and cuts to services and programs could be on the table if Rhode Island does not receive federal aid to address its economic woes and a looming $513 million budget deficit.

That was what House Speaker K. Joseph Shekarchi said during a virtual discussion with the Greater Providence Chamber of Commerce on Monday when he painted a picture of a state clinging to hope for a federal rescue package. Shekarchi and five fellow legislative leaders joined Chamber President Laurie White to discuss the issues facing Rhode Island.

Shekarchi and Senate President Dominick J. Ruggerio expressed their uncertainty and need for solutions as they face the 2022 fiscal year state budget process. They outlined a grim future for Rhode Island if federal funding does not include state aid in President Joe Biden’s stimulus package.

“Everything is on the table,” said Shekarchi, D-Warwick, regarding how the legislature was approaching the budget. “We simply do not know what next year is going to look like. The preliminary numbers are not good. We are projecting about a $500 million deficit.”

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Shekarchi said when the legislature passed its “skinny budget six weeks ago,” it included a provision that allows the governor an opportunity to present the budget in March, instead of in late January, as is the usual budget process.

The reason is “uncertainty,” said Shekarchi, and not knowing how much federal funding might be allocated for Rhode Island.

“We’re hopeful,” said Shekarchi. “We have looked at different versions of what is proposed – that there will be a component of funds that will be given to cities and towns, states and counties. That would be a significant help to us in Rhode Island.”

Shekarchi said if the state doesn’t receive the aid, it will be looking at “a significant amount of a shortfall. When I say that, I mean literally everything is on the table, including tax hikes, including cuts in services, including car tax phaseout. There is nothing that is beyond a review and a possible adjustment, should the need arise. So, that is where we stand.”

Ruggerio, D-North Providence, echoed Shekarchi’s sentiments, noting that there is a lot of uncertainty. “Last year Rhode Island’s economy was hitting on all cylinders, but then the coronavirus struck. This hurt us, as far as our economic revenues. Our revenue sources were operating at about 35% of what they normally operate at. This was devastating to the economy,” he said.

Ruggerio said the state needs to get back to its pre-pandemic economy. “I don’t know how we will do that,” he said.

White asked Ruggerio if the state would be in “better shape” if it receives any federal aid in the stimulus package. During the discussion, she advised lawmakers to “bake in provisions” to protect employers/business owners, so they can “govern their workplaces.”

“We don’t know what is forthcoming from Washington” in the stimulus package, said Ruggerio. “We don’t want to raise taxes if we don’t have to.”

White brought up the issues associated with transitioning from a sitting governor to an incoming governor, and how that might complicate the budget process, among other things. Gov. Gina M. Raimondo has been named as Biden’s U.S. commerce secretary. If confirmed, Lt. Gov. Daniel J. McKee would take her place as Rhode Island’s governor.

Shekarchi said that Raimondo is still “very much engaged” in addressing the state’s needs. “She is very active with Lt. Gov. McKee. We have all been elected with one goal in mind: to help Rhode Islanders,” he said.

“Work is being done,” said Shekarchi, noting that he thought McKee was “an honorable man. I have a good relationship with Dan McKee.”

White broached the subject of a potential 1 million-square-foot Amazon.com Inc. facility being constructed in Johnston.

“I don’t know anything of substance,” said Shekarchi. “Any time any business wants to come to Rhode Island, we should welcome them here.”

Shifting topics, Shekarchi touched on the proposed construction of a soccer stadium in Pawtucket, saying that the state needs to “encourage” that type of business.

Shekarchi said the state needs to get rid of the “not-in-my-backyard” mentality and “become good corporate citizens” that welcome enterprise. “Hopefully, what happens in Johnston comes,” he said.

Ruggerio said he “does not know exactly what is happening in Johnston,” while adding that the state needs to “encourage companies to come to Rhode Island. We need to also keep business in the state.”

Both leaders encouraged their constituents to reach out to state lawmakers to let their voices be heard.

“I welcome participation in the process,” said Shekarchi. “It’s important your voice is heard in the House, as we need input in crafting good legislation.”

Other state legislators who were in attendance and spoke included House Majority Leader Chris Blazejewski, D-Providence; Senate Majority Leader Michael McCaffrey, D-Warwick; House Minority Leader Blake A. Filippi, R-New Shoreham; and Senate Minority Leader Dennis Algiere, R-Westerly.

Cassius Shuman is a PBN staff writer. You may contact him at Shuman@PBN.com.

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