House Finance Committee Approves 2017 Budget Bill

​The House Finance Committee has approved an $8.9 billion 2017 state budget bill that includes no broad-based tax increases, provides tax relief to retirees, enhances the state’s economic development tools, fully funds education, significantly scales back a proposal to tax medical marijuana and halves parking fees at state beaches. The bill, approved by the committee early this morning, is expected to come before the full House of Representatives for a vote Wednesday, June 15, after which it will be sent to the Senate.

“I’m very proud of this budget. There are no new taxes or fees for the general public. In fact, we’ve eliminated those that were proposed, reduced fees and provided tax relief for seniors, low-income earners and small businesses while maintaining our commitments to economic development, education and the environment. It’s a pro-business, pro-jobs, pro-economy and pro-citizens budget, one that is the result of many, many hours of listening, thoughtful negotiating and consideration. I believe the citizens of our state will be happy with this budget,” said House Speaker Nicholas A. Mattiello.

Said House Finance Committee Chairman Marvin L. Abney (D-Dist. 73, Newport), “I believe this budget reflects what the people of Rhode Island have been asking for for a long time. We listened to many Rhode Islanders, and they want us to concentrate on encouraging job growth, rebuilding the economy and providing tax relief.”
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The Finance Committee added a new initiative to the budget bill (2016-H 7454A) to provide a state income tax exemption to all retirees who have reached the full Social Security retirement age beginning in the 2017 tax year as a means to provide tax relief to seniors living on fixed incomes. The program would exempt the first $15,000 of income from state income taxes for retirees earning up to $80,000 as single tax filers, or up to $100,000 for joint filers. Last year in the 2016 budget bill, the General Assembly exempted all Social Security benefits from state income tax for those under the same income limits. This year’s initiative applies to other types of retirement income, including public and private pensions. The move would benefit 61,571 Rhode Islanders at a cost to the state of $7 million in the 2017 fiscal year, when it is in effect for half the year, and $14 million when it is effective for the full year in the 2018 budget.

The committee declined to include the governor’s proposal to increase the cigarette tax from $3.75 per pack to $4. It also significantly reduced a proposal included in her budget proposal to require “tags” on medical marijuana plants grown by patients or caregivers. While the committee maintained her proposals to more closely regulate medical marijuana, including limiting caregivers to a total of no more than 24 plants, it reduced the tag fees from $150 each for patients growing their own plants or $350 for caregivers to about $25 for either. That price is expected to cover only the cost of regulating the industry, rather than raising revenue for the general fund, House leaders said.

The committee agreed with Gov. Gina Raimondo’s plan to increase the earned income tax credit to 15 percent of the federal credit, after raising it from 10 percent to 12.5 percent in 2016. The change will affect 83,000 Rhode Island tax filers earning $50,000 or less, allowing them to keep more of what they earn, and helping Rhode Island businesses who benefit from the increased spending power of those consumers.

The Finance Committee concurred with a proposal by the governor to add $9 million to implement the federal consent decree addressing the statewide day activity service system for individuals with intellectual and developmental disabilities, with part of the money dedicated to raising the wages of direct care workers who serve the developmentally disabled.

Additionally, the committee restored the Medicaid COLA for nursing homes, which was frozen under the governor’s budget proposal, with 85 percent of the increase earmarked for raising the wages of direct care workers in nursing facilities.

Just in time for beach season, the Finance Committee slashed parking fees at state beaches — mostly in half — to better enable Rhode Islanders and visitors to enjoy one of the state’s greatest treasures. The cuts, effective July 1, eliminate hikes made in 2012, and apply to all types of passes: single-day weekend and weekday as well as season passes for residents, nonresidents and senior citizens. (Admission to state beaches themselves is free.)

The committee also added a further reduction in the state’s minimum corporate tax to help small businesses. Legislators reduced it from $500 to $450 in last year’s budget bill. The committee approved a further reduction to $400.

To help businesses of all sizes, the committee concurred with Governor Raimondo’s proposal to restructure the unemployment insurance taxes paid by employers, saving them an estimated $30 million. The changes to the program, which took in $113 million more than it paid out last year, would cut the average cost per worker from $708 to $631 without changing benefits or eligibility.

The committee continued commitments made last year to economic development initiatives, enhancing several, including additional funding for the Rebuild Rhode Island tax credit to cover financing gaps for business development or expansion projects, adding $7 million in additional funding for the First Wave Closing Fund ($2 million more than the governor’s proposal), and creating a new Air Service Development Program to encourage more direct flight between T.F. Green Airport and major metropolitan areas.

Although the bill does not include a recent proposal for a $20 million bond referendum for an expansion at ProvPort, it did leave intact most of the bond referendums proposed by the governor, with some reductions in amounts to be borrowed based on the identification of other sources of funds. The bill would place five bond referendums on the November ballot: up to $50 million for rebuilding of piers at Quonset Point, up to $45.5 million for higher education; up to $50 million for affordable housing (with $10 million added by the committee to go toward lead remediation), up to $35 million for environmental and health initiatives and $27 million for the state Veterans’ Home.

The higher education bond includes $20 million to help develop an “innovation center” connected with the University of Rhode Island to encourage innovation and job creation by connecting the state’s businesses, medical facilities and universities so they can collaborate on new ventures.

The committee did not include the governor’s proposal to borrow $40 million for additional school construction, instead opting to include $80 million for construction within the budget without additional borrowing until an ongoing study of statewide school construction needs has concluded.

The budget approved by the Finance Committee fully funds the sixth year of the 10-year phase-in of the state education funding formula, increasing aid to local school districts by a total of $39.1 million. In response to a problem identified by a panel that studied the formula earlier this year, the committee voted on a one-year pilot program to send more funding to schools with high numbers of English language learners, although House leaders today suggested that the funding formula should be tweaked to create a permanent fix in future years.
The committee also included a measure to address another question of school funding equity: local districts’ payments to charter schools their students attend. The committee moderated the governor’s proposal somewhat, allowing districts to reduce payments by either 7 percent of the per-pupil tuition cost or the average difference between per-pupil unique costs of the sending districts and those of the charter schools, whichever is greater. The committee also provided some temporary relief for districts with particularly high concentrations of students attending charter or vocational schools.

The committee concurred with the governor’s proposed tuition freeze at the Community College of Rhode Island, Rhode Island College and the University of Rhode Island, as well as her proposal to allow Rhode Island students to take the SAT and the PSAT for free.

For the environment, the committee included a five-year extension of the state’s Renewable Energy Fund, and expanded the state’s net metering program to allow “virtual” or off-site net metering by all customers, opening up access to renewable energy generation to more Rhode Islanders. Net metering is a practice that allows those who install renewable energy systems such as solar panels to connect them to the electric grid and receive credit on their bill for any excess energy they generate. Currently only municipalities are allowed to receive net metering credit for energy generated at a site other than one receiving the credit. The bill caps the statewide total of virtual net metering projects at 50 MW.

The committee also temporarily restored tourism promotion funds to the state’s regional tourism districts to restore their funding to their 2015 levels for one year, so they can promote the state’s tourism resources while the Commerce Corporation reorganizes its statewide tourism promotion campaign.

The committee added a measure to clarify state law regarding transportation network companies, such as Uber, to ensure that they are subject to state sales tax, just as taxis are.

As legislative leaders announced Monday, the budget approved by the committee eliminates the Community Service Grant program in favor of two transparent methods of funding community organizations: itemized budget appropriations and competitive programs administered by state agencies. The total of the two programs is about $6 million, down from more than $11 million in the current year’s budget.
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Speaker Mattiello praised Chairman Abney’s hard work on the budget. Chairman Abney was appointed chairman only a month ago in the thick of budget negotiations, and the speaker said he was very proud of the strong leadership and determination Chairman Abney demonstrated in bringing the budget to this point.