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Chafee Tells State: ‘The Changes We Have Made Are Working.’

Thursday, January 17, 2013


In a decidedly optimistic speech that highlighted his priorities for the upcoming fiscal year and beyond, Rhode Island Governor Lincoln D. Chafee presented his State of the State Address last night before a joint session of the Rhode Island General Assembly and gave lawmakers their first view at his proposed 2014 budget that he says will keep “Moving Rhode Island forward.”

No Increases

Throughout his speech, Governor Chafee highlighted what he felt were the two biggest achievements of his proposed budget: that there are no tax or fee increases from last year and that, if approved, the budget would lower the state’s corporate tax rate from nine percent to seven percent over the course of three years.

That move, which would catapult Rhode Island from its current rank of 43rd in the country to 26th overall in that category—not to mention potentially make it the state with the lowest corporate tax rate in New England, earned high praise from General Assembly members.

More importantly, Chafee said, the shift would go a long way in helping to improving the state’s economic climate.

“There is a popular saying that bears repeating tonight,” he said. “It goes: ‘Don’t tell me what your priorities are. Show me your budget, and I’ll tell you what they are.’ Well, anyone wondering what my priorities are should read the budget I respectfully submit to you tonight. It continues the path that I believe will make Rhode Island a stronger state in both the near‐ and long‐term future.”

Chafee’s speech put an emphasis on the way Rhode Island has changed in recent years and the governor said that, thanks to “good management and good decisions”, the state has ended the past two fiscal years with surpluses, has revenues that are “exceeding projections” and that the policies in place are “providing certainty, predictability, and stability.”

“And that’s what businesses demand to have the confidence to create jobs in Rhode Island,” he said.

Chafee said he was able to present the largely positive budget without tax increases and with a lower corporate tax rate “thought both good fiscal management and a strengthening economy” but said it was important that the state continue to invest in “the building blocks of this progress.”

“That is, investing in education, infrastructure, and workforce development,” he said.

Chafee’s budget does just that.

More for Education

In addition to fully funding the state’s school aid formula, the governor is proposing $30 million in additional aid to local school districts as well as an allocation of over $14 million to support repairs at the state’s vocational education facilities.

This is on top of a $6 million increase to the Community College of Rhode Island, Rhode Island College and the University of Rhode Island that, coupled with commitments from the institutions to cut spending, should freeze tuition levels for students who want “a quality college education.”

“When you pass this budget, we will have invested $115 million in public K‐12 and higher education in Rhode Island over the past three years,” Chafee told the Assembly.

Chafee also announced a three-million dollar workforce initiative that he believes will help “Rhode Island employers looking to hire or expand” find qualified candidates for their positions.
In addition, the governor is proposing a new investment in the state’s infrastructure.

“Rhode Island is the second‐most densely populated state and one of the most heavily traveled, all in a coastal salt air environment – and our infrastructure takes a beating,” he said. “Maintenance of our roads and bridges is critical. Make no mistake: strengthening our infrastructure is an integral part of improving our economic competitiveness.”

Chafee’s budget features a proposed $11 million “pay-as-you-go” program for projects that are “Shovel-ready” and could start immediately.

“This is a smart opportunity to get the trades back to work as soon as possible and improve the condition of our infrastructure,” he said.

Investment in Knowledge (District)

Chafee’s budget also attempts to “accelerate the economic activity in Providence’s Knowledge District” by giving an additional $500,000 to the 195 Redevelopment Commission and the governor is committing an additional $600,000 to “bolster the state’s tourism marketing efforts.”

One of the biggest surprises of Chafee’s speech and budget were an aggressive approach to property tax relief efforts.

The Governor is proposing an additional $30 million for property tax relief, $20 million of which comes in the form of additional aid to cities and towns and $10 million of which comes in a local road/streetscape program from RICAP. In addition, Chafee is proposing a change to the historic tax credit program by providing access to abandoned tax credits.

“Failure to support these initiatives will only drive Rhode Island further down on the chart that matters most to our economic climate – the burden of local taxes borne by businesses,” he said. “Our state as a whole cannot be successful without the financial health of our cities and towns.”

Not everything about the Governor’s speech was positive, however.

“I anticipate criticism about my decision to lower the corporate tax rate while there is a strain on social services,” the governor said, acknowledging his budget’s plan not to include cost of living increases for hospitals and nursing homes as well as limiting the increases permitted to managed care providers.

Chafee’s budget also calls for the closing of a special care facility operated by the state.

“I would not make this recommendation if I did not truly believe that in the long run it will result in a stronger economy, more Rhode Islanders working, and fewer of our citizens in need of state support,” he said. “Our ultimate goal is always to get our people back to work and to give those who rely on social services a hand up, where possible, to financial independence.”

Chafee said his budget plan isn’t just about next year, it’s about the state’s long-term future.

“I am always considering how the decisions we make today will influence Rhode Island years down the road,” he said. “Governing a state is not about quick gains that draw headlines. It’s about positioning Rhode Island for lasting success and prosperity. Everyone likes accountability. And the best way to measure our progress is through tracking certain metrics. The results indicate that we are moving steadily in the right direction.”


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