House Budget Unveiled

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Saturday, June 18, 2011

Dan McGowan, GoLocalProv News Contributor

The $7.7 billion state budget approved by the House Finance Committee last night would implement a seven percent sales tax for only a handful of currently exempt items, including digital downloads, sightseeing trips, and nonprescription drugs, beginning Oct. 1.

The plan, which looks little like Governor Lincoln Chafee’s budget proposal, would generate just over $17 million in increased sales tax revenue for the state, down from the $165 million the Governor originally hoped for.

House Finance Chair Helio Melo said the committee’s goal was to implement a sales tax on only a select few new items in hopes that Rhode Island’s taxes will remain competitive with neighboring states. Melo said did not want to place a burden on Rhode Islanders by pushing for the Governor’s two-tiered tax plan.

Closing The Gap

So how is the General Assembly going to make up for a budget deficit that at one point was projected to be as high as $331 million for the next fiscal year?

In addition to the new revenue from the sales tax and revenue numbers that have proven to be better than expected this year, the Finance Committee’s plan is to make families using RIte Care pay higher co-shares, implement a three-year moratorium on any new school building or library projects and merge a number of departments.

Social Services Takes A Hit

The proposal also keeps the education funding formula intact while increasing higher education by $4 million. The Governor hoped to increase it to $10 million. The Committee’s plan does allow state employees to receive a three percent raise next month, but puts a “freeze” on automatic longevity pay.

Taking a hit in the budget was combined reporting, which some supporters claim would prevent big businesses from avoiding Rhode Island taxes and the Neighborhood Opportunities Program (NOP), which is likely to see its funding slashed by 97 percent next month.

Some social services advocates said they were disappointed in the General Assembly for not supporting to NOP program.

"By not funding NOP, the state of RI is depriving homeless advocates of the resources we need to serve our constituents,” John Joyce, an advocate for ending homelessness said. “With the winter shelters closing, there are simply no options left to stop people from dying in our streets. The lives of these most vulnerable citizens are the state's responsibility. Now so are their deaths."

“Outrageous” To not invest In NOP

Jim Ryzcek, Executive Director of the Rhode Island Coalition for the Homeless, called the Committee’s budget “unacceptable.”

“We find it completely unacceptable that the House Finance Committee’s answer to the current homeless crisis our state is facing is to do nothing,” he said. “We find it outrageous that our state is choosing to not invest in the one state program, the Neighborhood Opportunities Program (NOP) that can help those who are currently languishing in our shelter system. We find it unconscionable that with the emergency winter shelters closing, the yearly shelters full, 97% of state funding going away on July 1st and homeless people dying on our streets, that the House Finance Committee’s response is to do nothing!”

Charter Schools Won’t Get Public Dollars To Buildings

Homeless advocates weren’t the only ones upset by the Committee’s budget. Rhode Island Campaign For Achievement Now Executive Director Maryellen Butke didn’t like that the state will not give money to charter schools to build facilities.

She said the Committee must have forgotten that charter schools are public schools.

“House Finance Committee members today forgot that charter school students are public school students,” Butke said. “We will work with legislators to ensure that the final budget includes a policy that puts funding for charter school buildings on par with traditional public schools. Charter schools should not have to use precious classroom dollars for their facilities any longer.”

Progressive Leader: General Assembly’s Priorities Upside Down

Kate Brock, Executive Director of Ocean State Action, said her disappointment with budget stems from large corporations getting a break while the neediest Rhode Islanders are struggling to make ends meet.

Brock said she was happy to see some new taxes, but that the General Assembly still has its priorities mixed up.

“While it was mildly encouraging to see some new revenues in the mix, we are disappointed that the General Assembly is continuing to allow legal corporate tax evasion by excluding combined reporting from the budget,” Brock said. “While preserving tax breaks for the wealthy, the General Assembly is putting low income health care at risk, and de-funding programs to make sure people have roofs over their heads. Our budget is a statement of priorities, and once again the General Assembly's priorities are upside down.”

State Rep: Budget Addresses Future Fiscal Health

Finance Committee member Frank Ferri said the budget represents a good starting point, but agreed that the General Assembly cannot afford to allow some of the state’s most vulnerable citizens get left behind.

“I think the budget presented is a good start to addressing our future fiscal health,” Ferri said. “It minimizes regressive taxes and attempts to assist municipalities. It recognizes that we need to invest in education and begins dealing with structural deficits by looking at consolidation and efficiencies. Unfortunately some funds for the most needy have been cut. As we make future budget decisions through this recession I hope we look for ways to make sure no one is left behind.

Block: A Good Start

Still, others said Committee’s budget proposal was a step in the right direction. Former gubernatorial candidate Ken Block said he was happy to see only a small increase in items for the sales tax and that combined reporting was pushed aside.

“The GA really didn't go heavy on tax increases, which is great. In general I like the idea of combining state agencies and particularly water boards (a new pet peeve of mine),” Block wrote in an e-mail Friday. “Studying combined reporting is a good punt on an issue that might really aggravate our largest businesses. I still need to understand how the structural deficit is being brought down.”

More Needs To Be Done

But Block warned that more work still needs to be done given the current economy.

“Not that I am holding my breath, but with the depth of this fiscal crisis, I would still love to see the GA lead by example and suspend the legislative grant program,” Block added.

The General Assembly now has two weeks to pass the proposed budget before the new fiscal year begins July 1. The full House is expected to vote on the plan next Friday evening.

The Governor’s office was not available for comment Friday evening.

 

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