McKee proposes $12.8B budget that targets housing, COVID recovery

GOV. DANIEL J. MCKEE on Thursday released a $12.8 billion spending plan that seeks to commit over several years an estimated $1 billion in federal pandemic aid, providing historic funding for housing and support for small businesses and workforce development./PBN PHOTO/CASSIUS SHUMAN

PROVIDENCE – Gov. Daniel J. McKee on Thursday released a $12.8 billion spending plan for next fiscal year that also seeks to commit over several years an estimated $1 billion in federal pandemic aid, providing historic funding for housing and support for small businesses and workforce development.

The proposal for fiscal 2023, which would take effect in July, includes $4.7 billion in general fund expenditures. The governor’s budget represents a $267.6 million, or 5.3%, decrease in general revenue spending from the revised budget for this fiscal year.

As expected, the proposal seeks to legalize recreational marijuana sales. It allows for the controlled phase-in of retail licenses but does not expect shops to open until 2023 at the earliest.

The budget, which has been delivered to the General Assembly, represents the administration’s priorities for managing the COVID-19 pandemic health crisis, continuing access to an array of health services, supporting children, families, education needs, behavioral health and public infrastructure and technology.

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It does not include any major tax increases, according to McKee, but looks to commit all of the federal pandemic aid that the state has until 2024 to allocate.

In his budget statement, he said the fiscal 2023 plan’s priority is the health and safety of Rhode Islanders. The budget focuses on two things: the current health crisis and a 10-year plan for the state.

“The decisions we make this year have the potential to bolster Rhode Island’s economic comeback and propel our state into the next decade with strength,” wrote McKee.

Brian Daniels, budget director of the Office of Management and Budget, said the governor’s budget draws from three different sizeable pots of funds.

“We have the fiscal 2023 operating budget; we have the state fiscal recovery fund from the ARPA; and we also have a very substantial projected surplus in the current fiscal year …  [of] over $600 million,” he said.

Daniels said McKee is proposing to spend by 2027 all of the $1.13 billion in state fiscal recovery funds received, including the $119 million already allocated. That includes:

  • $250 million for addressing the housing crisis: $90 million for affordable housing development, $50 million for down payment assistance, $26.5 million for homelessness assistance, and $20 million for incentives for workforce housing.
  • $212 million for economic and workforce development: $70 million for investments in the blue economy, $40 million for investments in Real Jobs RI, $30 million for the biosciences, and $23 million for investing in a new Higher Education Academies.
  • $181 million for aiding small businesses and impacted industry: $45 million for financial assistance grants, $29 million for tourism and hospitality, $20 million for loans and access to capital programs, and $10 million for minority-owned businesses.
  • $152 million for public health: $50 million will continue support of the state’s efforts in managing the COVID-19 pandemic, as well as aid health care providers and their workforce.
  • $132 million for combatting climate change: $60 million for offshore wind infrastructure at Quonset’s Port of Davisville, $35 million for offshore wind facilities at South Quay, and $37 million for households and organizations to convert to electric heat.
  • $119 million for children, families, and education: $42 million for wage incentives for child care providers, $15 million for pediatric relief programs, $15 million for municipal learning centers, $11 million for early intervention programs, and $10 million for nonprofit support.
  • $42 million for behavioral health: $28 million for infrastructure and certified community behavioral health clinics, $6 million establishes a psychiatric residential treatment facility to prevent out-of-state placements for girls and young women, and $4 million for a mental health court pilot.
  • $27 million for public infrastructure and technology: $6 million for key state information technology improvements and a new permitting system for the R.I. Department of Environmental Management, $5 million for a Pawtucket bus hub passenger facility, and $5 million for support for municipal commercial districts.
  • $17 million for administrative costs.

The housing program, which Joseph Codega Jr., state budget officer, said was “unprecedented” in Rhode Island’s history, will see:

  • $90 million for creating and preserving 1,500 units for household earning up to 80% of area median income.
  • $50 million to provide $17,500 in down payment assistance to households.
  • $27 million for individuals and households experiencing homelessness or housing instability with infrastructure and support.
  • $25 million for a grant program to acquire properties to be redeveloped into affordable housing.
  • $20 million to support workforce housing.
  • $10 million for increasing developer’s ability to get projects underway.

McKee’s small-business package reduces the corporate minimum tax from $400 to $375, benefiting approximately 65,000 entities. It also would create a Taxpayer Steward within the R.I. Division of Taxation.

The governor’s budget calls for allocating $112 million to fund three capital improvement projects, funded through state fiscal recovery funds:

  • $47 million for a municipal matching grant program for cities and towns to build or renovate a community wellness center.
  • $35 million for a Rhode Island College Student Services Center.
  • $25 million for broadband grants, providing municipalities, public housing authorities, business cooperatives, and local internet service providers with state matching funds for last-mile broadband infrastructure projects.

The state projects a surplus of $618 million for fiscal 2022, and McKee’s budget recommends transferring $210 million to the Rhode Island Capital Plan Fund to support an overhaul of Eleanor Slater Hospital and support for other state facilities.

• $168 million for Eleanor Slater Hospital for facility and technology upgrades over the next seven years, including a new medical facility, and electronic medical records system, $120 million for utility and infrastructure improvements at the Pastore Campus, $108 million for funding a new medical facility on the Zambarano Campus, with more than 100 beds, and $13 million for state-run group home improvements.

• $50 million transferred for the Information Technology Investment Fund to replace the R.I. Department of Labor and Training’s mainframe and provide an electronic medical records system for Eleanor Slater Hospital.

• $100 million allocated for the state match for federal transportation projects for two years, unlocking $400 million in a federal funding source.

• $22 million for the state match for federal clean and drinking water programs for two years.

• $62 million to pay for the 1991/1992 pension obligations, resulting in annual; savings to the state of at least $6 million for more than a decade.

In response to the budget, House Speaker K. Joseph Shekarchi said he was pleased that housing continues to be one of the governor’s top priorities.

“It is one of mine too,” he said. “It’s good that the governor’s focus is on investment when it comes to the federal ARPA funds – I have been advocating for uses that produce long-term benefits for Rhode Islanders. The submission of his budget signals the start of the annual vetting process, and the House Finance Committee looks forward to reviewing the Governor’s proposals, as well as those of the House members and the public. We will continue to work with our colleagues in the Senate and the executive branch on all of these important budget issues this session.”

Senate President Dominick J. Ruggerio said, “At first glance, I am pleased that many of the initiatives proposed in the governor’s budget align with Senate priorities, such as investing in education, school facilities, housing, the environment, and small-business supports. Over the course of the next several months, the Senate Finance Committee will review all aspects of the budget through its thorough, open and public hearing process.”

Joseph Codega said the 2023 budget process will feature a transparency portal that the R.I. Department of Administration will make available to the public in February.

Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com. You may also follow him on Twitter @CassiusShuman.

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