After years of grappling with gaping budget deficits, state legislators are facing a problem in the 2022 General Assembly session unlike any they’ve seen in recent memory.
They have more money than they know what to do with.
Well before the opening day of the legislative session on Jan. 4, lawmakers have been mulling over how to deploy the state’s $1.1 billion slice of American Rescue Plan Act funding, and it is expected that they’ll spend much of the winter and spring hashing out those plans.
So far, the task hasn’t been as easy as it might sound, with no shortage of advocates, groups and individuals jockeying to get help for their cause.
General Assembly leaders are moving deliberately.
“It is a balancing of the immediate needs of people who need the money right away, and also the long-term benefits,” House Speaker K. Joseph Shekarchi said recently. “The good news is the federal government has given us three years to spend it. That is written into the law, but we are not going to take three years to spend it.”
In an embarrassment of riches, the state is also set to receive at least $2.5 billion from the infrastructure bill approved by Congress and signed into law by President Joe Biden in November. That money could go toward everything from road and bridge projects to Rhode Island T.F. Green International Airport improvements to broadband installations.
On top of that windfall, state officials have projected that Rhode Island could end the fiscal year in June with a $618 million surplus.
All of this is happening with the backdrop of general elections coming in the fall, raising the political stakes of decisions made in the next few months.
And there’s the pandemic. COVID-19 cases are surging again, putting lawmakers on alert. While the opening days of the session were scheduled to happen at the Statehouse – complete with face masks – leaders acknowledge that plans could change weekly, with the possibility of each chamber retreating to remote locations that allow for more social distancing, as they did last year.
No matter where they meet, lawmakers are expected to take on more than just ARPA spending this session, including the potential legalization of recreational marijuana and how to ease Rhode Island’s lack of affordable housing.
As always, high on the agenda is assembling a state budget for the 2023 fiscal year, which begins July 1. Gov. Daniel J. McKee is scheduled to submit his budget proposal by Jan. 20, a massive document that defines the administration’s priorities for the next 12 months.
With now nearly a full year in the governor’s office under McKee’s belt, it’s unclear how his budget plan will be greeted by the General Assembly leadership this time around.
In early December, the relations between McKee, Skekarchi and Senate President Dominick J. Ruggerio appeared to be amicable when the trio reached an agreement on how to spend an initial $119 million round of ARPA money.
In fact, one of the first orders of business when the General Assembly returned Jan. 4 was having the full House and Senate OK those plans, which included allocating $45 million for small businesses and tourism; $38.5 million for social services; and $29.5 million for affordable housing and broadband.
As for the rest of the ARPA allocations?
State Rep. Carlos E. Tobon, D-Pawtucket, co-chairperson of the House ARPA Task Force, said disbursements will be handled much differently than the $1.25 billion the state received from the Coronavirus Aid, Relief and Economic Security Act in 2020. In that case, legislators stepped back as then-Gov. Gina M. Raimondo’s administration identified where much of the money should be spent.
“We gave [Raimondo] the benefit of the doubt,” Tobon said.
This time, the public will be allowed to weigh in, and those targeted for funding will be more carefully vetted, he said.
“Rhode Island has to look at all the entities seeking funding to see what solutions they have, so when we allocate funding, we will know whether they are on the right track,” Tobon said.
On the Senate side, Ruggerio said he is looking for “transformational investments,” with a focus on the neediest in the state.
“We’ve held numerous meetings since the legislature ended its session to address critical issues of need,” he said, noting support for housing, child care initiatives and universal pre-kindergarten to aid the state’s working families.
Ruggerio said the Senate is exploring the use of about $125 million in federal COVID-19 relief funding to accelerate making pre-kindergarten available to all the state’s eligible children in about a five-year period.
So what’s in store over the next six months? Here are a few of the issues most likely to draw a lot of attention:
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CATCHING UP: Brenda Clement, director of HousingWorks RI at Roger Williams University, says some American Rescue Plan Act funding could be used to incentivize communities to make changes to local zoning and land use ordinances so that housing could be built with more density, as residential building permits have declined over the last decade. / PBN FILE PHOTO/RUPERT WHITELEY[/caption]
HOUSING DEVELOPMENT
In recent years, state leaders have placed the construction of affordable housing at or near the top of their list of priorities. But the shortage of those units has only gotten worse as rents and house prices continue to rise, according to advocates for the poor.
The state has taken action. McKee recently appointed Josh Saal as the deputy secretary of commerce and housing – the state’s first “housing czar” – to oversee housing initiatives.
In addition, the first round of ARPA allocations approved by lawmakers on Jan. 4 included $15 million for developing affordable housing, $12 million to acquire properties for redevelopment and $1.5 million for housing-related grants.
That’s a start, but much more needs to be done, says Brenda Clement, director of HousingWorks RI at Roger Williams University. She’s hoping state lawmakers will dip farther into the $1 billion pot of federal aid for some assistance.
“We need to increase our production of affordable homes either through construction or repurposing existing buildings,” she said. “Directing some of the federal ARPA funding to acquire properties and start the development process is critical.”
Clement said the money could also be used to incentivize communities to make changes to local zoning and land use ordinances so that housing could be built with more density. Residential building permits have declined over the last decade.
“We have been underproducing for years, so we have a lot of catching up to do,” she said.
As for McKee allocating about $9 million to create 400 more emergency shelter beds to address homelessness, Clement said it is a good thing to keep people safe during the winter amid a public health crisis.
“However, it is a short-term fix for the underlying problem, the lack of affordable housing,” she said. “We need a plan so that people can transition to more permanent housing when they leave shelter.”
For his part, Shekarchi points to the creation of a $25 million “housing production fund” by legislators during the General Assembly’s previous session as part of his accomplishments in his first year as House speaker.
Without being specific, he has said he plans to introduce more housing legislation this year, too.
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CHANGE NEEDED: John Marion, executive director of Common Cause Rhode Island, says the state constitution should be amended to create an independent commission to handle the redrawing of legislative district maps in Rhode Island. / PBN PHOTO/MICHAEL SALERNO[/caption]
CHILD CARE
McKee says providing support for child care services is crucial as those services have become more scarce and more expensive during the pandemic, eating away at the finances of families and making it difficult to find care so parents can go to their jobs.
That’s why the first round of ARPA allocations included $38.5 million to support children, families and social services, according to the McKee administration.
Of that amount, $13 million would fund the R.I. Executive Office of Health and Human Services, with $7.5 million funding pediatric provider stabilization grants, and $5.5 million for early intervention. About $12.5 million will fund R.I. Department of Children, Youth and Families payments to direct-care staff and supporting staff via service provider organizations.
David Caprio, CEO and president of Children’s Friend, a nonprofit child care provider, said the system does not have the staffing capacity to provide services to children with developmental issues.
Caprio said the $5.5 million in early intervention relief funding is needed, but it does not solve the problems that have existed with the underfunded program for many years.
“It is no surprise that the system is in crisis, and that vulnerable young children are not getting the services they need when they need them,” he said. “The $5.5 million will get the system through to June, but to ensure sustainability, rates must be increased substantially in the budget year beginning July 1.”
Caprio said as it stands now, young children referred by a pediatrician for service or assessments are put on a waiting list for months.
“A three-month delay in the life of a 2-year-old is much too long,” he said. “The brain development in young children is critical to future success in life. In Rhode Island right now we are putting our kids on a path to poor outcomes by delaying access to needed services.”
Caprio feels that child care, in general, is underfunded by low Medicaid reimbursement rates, resulting in low wages paid to the workers employed by the programs. The best thing the General Assembly can do is to increase the rates the state pays for child care, he said.
“These low wages make it hard to recruit new staff and to retain our current staff,” he said. “If we really believe that our kids are our future, then we in Rhode Island need to start investing in them. So, in short, we need to have real increases in the child care rates paid by the state.”
SMALL-BUSINESS RELIEF
While lawmakers agree that aiding small businesses remains a priority, what to do to help isn’t so clear.
The first round of ARPA allocations provides $32 million to the R.I. Commerce Corp. to assist small businesses.
That includes $12.5 million for direct payments to businesses that have lost revenue due to the pandemic; $10.5 million for technical assistance to support “long-term business capacity building”; and $7.5 million for improvements to support public health and outdoor activities.
As far as taking further action, Ruggerio said the legislature will take a “wait and see” approach to determine what is needed. “We just don’t know at this point in time,” he said. “It’s difficult to say we’ll need more money by such and such a time.”
One thing the Senate is working on is incentivizing people to get back to work, such as in the health care sector, according to Ruggerio. “Lifespan [Corp.] is down about 2,400 people,” he said. “So, we’re looking at ways to incentivize people to work in that area.”
Ruggerio said he’ll be supporting measures that would forgive loans of graduates from state colleges who go on to work in the “care economy.”
Shekarchi said he hears every day from small businesses that they are struggling, but there are two big problems facing them: the labor shortage and supply chain issues.
“These are national problems, not unique to Rhode Island, that will probably require national remedies,” he said. “But we can do our part through R.I. Commerce to create aid, including the issuance of grants.”
McKee has touted his support for the state’s small businesses. In November, he unveiled a $4.5 million Back to Business program that would offer $5,000 grants to small businesses struggling with labor shortages.
While business leaders are pleased with such efforts, some are still wary that businesses could bear the brunt of attempts to raise state revenue, such as in 2021 when McKee decided to tax forgivable Paycheck Protection Program loans of more than $250,000.
“This is not the year to place any financial burden on business in the form of taxes or fees,” said Elizabeth Catucci, CEO and president of the Northern Rhode Island Chamber of Commerce.
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AWAITING A DECISION: Trimmer and harvester Alan Roy tends to the marijuana plants at Mammoth Inc., a licensed cannabis cultivator in Warwick. The local industry could benefit if legislators legalize recreational marijuana use in Rhode Island. / PBN FILE PHOTO/MICHAEL SALERNO[/caption]
MARIJUANA
The passage of a measure to legalize recreational marijuana is atop the list of priorities for the General Assembly leadership, even if legislators are still working out the nuances associated with taxing and regulating the recreational drug.
After months of negotiations among top legislators and the governor’s office, one of the final hurdles is whether the industry should be regulated by a special “cannabis commission,” a state agency such as the R.I. Department of Business Regulation, or a mix of both.
Ruggerio is eager to get something on the books, in part because of a concern that Rhode Island is losing potential revenue to Massachusetts, where recreational marijuana has been legal for several years. Connecticut also legalized recreational marijuana earlier this year.
Sen. Joshua Miller, D-Cranston, and Rep. Scott A. Slater, D-Providence, who both sponsored marijuana legislation, have echoed that concern.
Miller, whose legalization bill passed the Senate last session but died in the House, said the legislature is close to seeking consensus on a piece of legislation that would be an entrepreneurial model.
“It’s just a matter of working through a few of the things regarding regulation of the industry,” he said.
Shekarchi has said he expects legislation that he supports to be introduced at some point in January.
REDISTRICTING
The process of redrawing Rhode Island’s legislative districts – which takes place every 10 years – has drawn criticism and accusations of gerrymandering and “incumbent protection.”
While the reapportionment is overseen by a special commission, many of its members are handpicked by General Assembly leadership, critics note. The commission has been holding hearings on proposed maps, and its recommendations will be delivered to the General Assembly by Jan. 15 for final approvals.
John Marion, executive director of Common Cause Rhode Island, has been following the process closely, and he opposes allowing legislators to pick the commission members responsible for drafting the maps.
“The process for redistricting is corrupt, but I’m careful using that term because it’s pretty charged,” he said. “What they’re doing is perfectly legal. I don’t think it’s right. Common Cause thinks it’s a conflict of interest.”
In his testimony to the commission, Marion said, “The plans you have before you seem to value one thing above all else – protecting incumbents of both political parties.”
Marion said the state constitution should be amended to create an independent commission to handle the redrawing of districts.
Shekarchi and Ruggerio see no reason to change the process. The House speaker said he has taken a “hands-off approach” and has confidence in the independence of the commission’s recommendations.
Cassius Shuman is a PBN staff writer. Email him at Shuman@PBN.com.
