Governor Gina Raimondo on Thursday presented to the General Assembly a $9.2 billion budget that cuts car tax assessments by 30 percent; offers Rhode Islanders two free years of college tuition; raises the minimum wage to $10.50 an hour, effective in July; and hikes the cigarette tax 50 cents, to $4.25 a pack.
The administration pitches the budget as being built around five themes: middle class relief; helping working families; strengthening the economy; protecting health and safety; and prioritizing fiscal responsibility.Listen to an audio report on the governor’s budget.
Yet the unveiling of the spending plan is just the first step in the process, and the proposal could face broad changes before the legislature signs off ahead of the July 1 start of the next fiscal year.
Some critics have questioned whether the state can afford the free tuition plan — which would cost an initial $10 million and rise to $30 million a year — and whether free tuition is the best use of state money. During a mid-day briefing on Smith Hill, University of Rhode Island President David Dooley said the free tuition plan would offer broad benefits to the state.
“Investing in higher education, particularly public higher education, is a critical step to making the state more economically productive, more successful and providing a greater, I think, quality of life, standard of living and income to Rhode Islanders,” Dooley told reporters.
On Tuesday, House Speaker Nicholas Mattiello was non-committal in reacting to the free college tuition plan. A clash is also brewing over the difference between Mattiello and Raimondo’s approach in cutting the car tax.
The legislature will now spend the next few months reviewing the governor’s proposed budget.
Republicans have reacted critically to Raimondo’s spending plan. House Minority Leader Patricia Morgan called it “another tax and spend budget,” and she outlined a bleak view of the state during the GOP rebuttal to the governor’s State of the State address on Tuesday.
But Raimondo administration officials say the governor’s budget is the third consecutive one to avoid broad-based tax increases. It also considerably flattens the state’s future projected deficits. Deficits were projected to soar over $300 million a year within five years, but will now remain under $200 million with the governor’s plan, the administration said.
The spending plan banks on about $35 million in new tax revenue from sales to online retailers like Amazon.
The budget freezes rates for hospitals, nursing homes and the administrative portion of Medicaid managed care organizations. It also includes a one percent cut for hospitals, beginning January 1, 2018.
The budget raises pay for home care workers and workers caring for the developmentally disabled.
Nicholas Oliver, executive director of the Rhode Island Partnership for Home Care, reacted with a statement saying that the budget bill gives Health and Human Services Secretary Elizabeth Roberts “unprecedented unilateral authority over” implementation of a base rate increase for Medicaid-contracted home care providers. “While home care providers are appreciative that Governor Raimondo is proposing a small base rate increase, it does not go far enough as to revert the access to home care crisis,” Oliver said.
State officials said the budget does not include any contingencies based on possible actions by the incoming Trump administration.
The spending plan closes an estimated $66 million deficit, down from a projected budget hole of $184 million for the fiscal year starting July 1.
As part of a new Raimondo initiative meant to boost manufacturing, the budget seeks to use a total of more than $6 million in tax credits, vouchers and stimulus to promote advanced manufacturing.
Hiking the cigarette tax is expected to generate $8.7 million in general revenue. Of that sum, $2.5 million would go for recreation-related purposes and $500,000 for an anti-smoking campaign.