House Budget Fight: 10 Issues to be Resolved
Tuesday, June 10, 2014
The $8.7 billion FY 2015 budget unveiled and approved by the House Finance Committee on June 5 has been met with a mix of support from the business community in the state -- and also opposition in parts from both the political left and right -- as the full House is slated to take up the bill on Thursday.
SLIDES: See 2015 RI Budget Issues BELOW
"The gorilla in Rhode Island's living room is an abysmal tax and business climate that repulses business, suppresses employment and unnecessarily shrinks the tax base," said Monique Chartier with advocacy group RI Taxpayers, who added, however, "In that it would modestly reduce the corporate and estate taxes, the proposed FY2015 budget takes some welcome steps in the right direction."
Chartier continued, "However, as the budget also raises the gasoline tax, increases the auto inspection fee, keeps in place the $500 minimum corporate tax and does little or nothing to address the state's regulatory climate, it is not the bold move that the state needs to begin to rebuild the economy by fixing the state's tax and business climate."
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTMike Stenhouse with the RI Center for Freedom and Prosperity said of the budget, "We did cuts for wealthy individuals, but now we're asking on average more from the middle class -- more taxes in the way of vehicle feels, clearing records in traffic courts, and new transaction fees on real estate transactions," said Stenhouse. "These are things that every day folks go through."
Business Community in Support of Budget
The budget proposal received high marks from a number of sectors of the business community, including the Greater Providence Chamber of Commerce.
“Overall, the proposed House Budget includes many of the provisions that the Chamber and the Rhode Island business community have pressed for in recent years. In particular, we are pleased to see the corporate tax rate reduction which will make Rhode Island more competitive, attract new businesses, and create jobs,” said Laurie White, President of the Greater Providence Chamber of Commerce. “We applaud Speaker Mattiello and House leaders for putting our state’s economic recovery front and center and for helping to make significant improvements to our business climate.”
The Chamber also cited the necessary funding and approval of the lease agreement for the shared Nursing Education Center to move forward, the general obligation referendum of $125 million for the URI engineering school, and the issuance of debt to fund the Garrahy garage project as highlights in the budget.
Distinguished Professor of Business at URI, Edward Mazze, noted that for the next fiscal year, the three most important accomplishments as included in the budget are: "The reduction of the corporate income tax which will encourage corporations to stay in the state as well as attract other companies to Rhode Island, raising the floor of the estate/inheritance tax to slow down the loss of middle and high income people leaving Rhode Island and keeping the state income tax rates at its current level."
House Speaker Nicolas Mattiello has said that while he was pleased with the budget in its current form, he believed circumstances prevented the House from doing more.
“The provisions in the budget to stimulate job growth and economic activity are very significant," said Mattiello. "Unfortunately, we were faced with a difficult budget which had a $70 million shortfall after Governor Chafee submitted it in January. I wish we could have addressed additional tax-reduction measures, made further investments in higher education, and provided incentives to encourage entrepreneurship, but we will address those issues and many others next year. This is an excellent budget and we will build on the momentum we gained this year. I am tired of Rhode Island ranking last in unemployment, and this budget will get us on the right path toward an improved economy.”
Looking Ahead
"The proposed Fiscal Year 2015 State Budget includes important initiatives to enhance Rhode Island’s economic competitiveness. Reform in the corporate tax structure and expansion of the estate tax credit when coupled with capital investments in higher education and improved workforce training programs give business the tools needed to compete more effectively in a global economy," said former Director of Administration Gary Sasse. "Given these actions the business community has no more excuses to underperform the national economy- it is time for them to either fish or cut bait."
While there is provision in the house bill to allow for the elimination of the cap on medical marijuana plants allowed at a compassion center, the pro-legalization community is hopeful their findings on the bottom line will help bolster the legalization and taxation effort.
"Our proposal to regulate and tax marijuana similarly to alcohol is being seriously considered by lawmakers and is very much on the table. It's easy to see why, because there are a lot of good jobs and millions of dollars in tax revenue for Rhode Island on the line," said Jarrod Moffat with RegulateRI. "From January through March, Colorado brought in $12.6 million in taxes from legal marijuana sales, and as of May 1, 2014, Colorado's Marijuana Enforcement Division has issued over 9,000 employee badges, which are required for everyone directly handling marijuana, not to mention the increased work for lawyers, accountants, security guards, electricians and other ancillary businesses."
Related Slideshow: FY15 House Budget: Ten Important Issues to be Resolved
On June 5, the House Finance Committee approved an $8.7 billion Fiscal Year 2015 budget that "closes an unexpected $67 million gap, fully funds education aid while averting bridge tolls and tax increases, establishing a steady source for transportation funding, promoting economic development and reducing the corporate and death taxes".
As the full House and Senate prepare to take up the budget, below are ten provisions of importance to keep an eye on at the General Assembly.
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