PROVIDENCE – The R.I. Senate Committee on Finance approved a $13.1 billion fiscal year 2022 budget on Wednesday with a unanimous 12-0 vote.
Committee Chair Sen. Ryan William Pearson, D-Cumberland, who oversaw his first budget, said that the finance committee held over 30 meetings and heard 75 hours of testimony regarding the budget. “It was a significant investment of time and energy,” he said, noting that he believes it meets the needs of the people as a “responsible budget.”
The approved budget is identical to the budget passed by the R.I. House of Representatives on June 24.
Senate President Dominick J. Ruggerio said it was a difficult year for the finance committee to operate, as it dealt with the challenges related to the pandemic. “I am immensely proud to be the presiding leader of this chamber and to have such a great finance committee as we have had here, and do the work you did this year,” he said. “I think the work that has been done has been absolutely flawless.”
Greg Pare, spokesman for the Senate, said the budget will be reported to the floor and scheduled for consideration by the full Senate either Thursday or Friday.
After some spirited debate during a marathon session, the House approved the budget by a vote of 64-10, with an amendment that would allow businesses taxed on Paycheck Protection Program loans greater than $250,000 to make interest-free payment by March 31, 2022.
The budget is nearly $2 billion more than was proposed by Gov. Daniel J. McKee in March when the state was facing a $329 million budget deficit, and taxes were being entertained. The legislative landscape changed in late May when the R.I. Office of Management and Budget reported a $417 million surplus.
The budget the Senate finance committee approved on Wednesday does not include allocation of any of the $1.1 billion in federal stimulus aid the state will be receiving from the American Rescue Plan Act.
The fiscal year 2022 budget will include taxation of businesses that received forgivable PPP loans above $250,000, but proposals from both houses aimed at increasing taxes on high-wage earners is not included.
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.
According to House estimates, the raising of the $150,000 threshold that was included in McKee’s original budget proposal will amount to $13.7 million less in tax revenue from the fiscal 2021 and 2022 tax years.
The PPP budget amendment addresses amended tax filings for businesses taxed on the loans, giving them until March 31, 2022 to provide interest-free payment of the loans.
Legalization of adult-use recreational marijuana, which was passed in the full Senate, was not included in the budget. Nor was the proposal to impose a 1.5-cent-per-ounce tax on sugary beverages. McKee said he opposed the tax, and all other tax proposals, except for taxation of PPP loans.
The budget includes allocation of $300 million to fund unemployment insurance, and $600 million to fund schools.
A top priority for legislature leaders 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 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.
The budget does not fund the R.I. Department of Health’s request for a new laboratory space at $82 million, which would address unexpected crisis such as the pandemic. Legislative leaders said they intend to research and hold public hearings to vet such a project.
The budget does not fund the Eleanor Slater Hospital, although the governor will be providing a plan to address issues at the hospital.
Legislative leaders said some pieces of proposed legislation not included in the budget could be revisited as part of unfinished business in the summer or fall after the June 30 deadline, when the legislative session ends.
Lawmakers said legalization of adult-use marijuana could be one of those pieces of legislation. Rep. Scott A. Slater’s legislation calling for legalization of adult-use marijuana, which was heard by the Senate Finance Committee and held for further study on Tuesday, is one of those bills.
Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com.
