Chafee unveils $8.2 billion spending plan
Gov. Lincoln Chafee unveiled an $8.2 billion budget last week in Providence. In his state of the state address before a joint session of the legislature, Chafee said Rhode Island has gone through tough times recently and that the national recession has taken a toll on the state’s economy, its businesses, and most dramatically on its people.
“Short-sighted decisions in better times left us struggling to provide the most basic services,” Chafee said. “But Rhode Island is strong. And tonight we begin a new year with new opportunities to continue Rhode Island’s recovery.”
Sen. President Teresa Paiva Weed, a Democrat who represents Jamestown and Newport at the State House, was generally pleased with the proposed budget.
“I think it’s a great starting point,” she said. “The governor incorporated many of the issues that he, the speaker and I have been discussing on a regular basis. The most significant difference between this budget and his previous budgets is that he has not proposed any new taxes, which I applaud. In the past, the fact that he has proposed new revenue has made it very difficult for us to work within the parameters of the budget priorities which he had established.”
According to Chafee, good management and good decisions have resulted in budget surpluses for the last two years. He cited the fact that revenues have exceeded pro- jection as evidence that the state is being responsibly managed.
“We are providing certainty, predictability and stability,” the governor said. “And that’s what businesses demand to have the confidence to create jobs in Rhode Island.”
Chafee’s budget includes no new taxes, fees or charges of any kind. The biggest news is that he would like to decrease the state’s corporate tax rate by 2 percent over the next three years, from 9 to 7 percent. The decrease has the potential to make Rhode Island the state with the lowest corporate tax rate in New England.
“Right now, Rhode Island has one of the highest corporate tax rates in the nation at 9 percent,” said Rep. Deb Ruggiero, a Jamestown resident who represents her hometown in the House. “This could be seen as real positive with the business community.”
Paiva Weed said that she has been supporting the reduction in the corporate tax rate for more than two years, and she appreciates the manner in which the governor has approached the reduction. He will eliminate specific identifiable tax breaks that are provided to large corporate taxpayers in favor of a policy that favors a greater number of residents.
“Perhaps most importantly,” she said, “it sends an important message to the rest of the country in terms of Rhode Island’s willingness to compete with other states to bring new business this year.”
In terms of new spending, Chafee has asked for $30 million in additional state education aid, which Ruggiero called “a very good move to support education.” The budget also includes a $6 million increase in aid to higher education to benefit the three state colleges: the Community College of Rhode Island, Rhode Island College and the University of Rhode Island.
“The leadership of these institutions must meet me halfway,” Chafee said. “If they can achieve $6 million in total savings and effi ciencies, coupled with my $6 million in additional funding, we can guarantee the students of these schools no tuition increase next year.”
Chafee proposed $14 million to support repairs at state vocational education facilities. There is also a $10 million municipal incentive program for cities and towns with pension-funding plans, $10 million for road and streetscape improvements, and $5 million for distressed communities. Citing another strong tourism season, the governor also proposed $600,000 in additional funding for tourism.
The proposed budget also includes $70 million in federal dollars from the Affordable Care Act – widely known as Obamacare. The money will provide Medicaid coverage to approximately 22,000 adults who are living on an income of less than $15,000 per year.
Spending cuts will come from the elimination of the enterprise zone credit, and the end of a jobdevelopment credits that benefi t nine Rhode Island companies, CVS being by far the biggest benefi ciary of the program.
Chafee also proposed cost savings on a variety of Medicaid programs in a effort to offset spending increases. A proposed cost-ofliving increase in Medicaid reimbursements to nursing homes has been suspended. There are also cuts to payments for inpatient and outpatient hospital services, and one or two group homes for the developmentally disabled may be closed.
“As a member of House finance, I will listen to the testimony and rationale, but I’m not a proponent of balancing a budget on the backs of the elderly, poor or developmentally disabled,” Ruggiero said.
Two new programs to create jobs have been proposed as part of the budget. One would provide up to 10 weeks of reimbursements to companies for half of the costs of hiring and providing job training. This program would benefit as many as 425 Rhode Islanders this year and 1,050 in 2014. The other program would provide subsidies for on-the-job training for people on welfare. The proposed budget would also provide 145 new state jobs.