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Raimondo Proposes More Than Half Billion Dollars in Bonds in Budget Proposal

Wednesday, February 03, 2016


Governor Gina Raimondo has proposed over a half billion dollars in bonding in her nearly $9 billion dollar Rhode Island state budget proposal for next year, which is focused on jobs, education, and workforce development.

Touting no broad based tax increase for Fiscal Year 2017, Raimondo announced a broad range of spending and cost-saving initiatives in her budget outlined in her State of the State to the General Assembly on Tuesday — including $230 million of of general obligation bonds that could be put on the ballot in November, as well as the $300 million in bonds proposed under the revised RhodeWorks plan, which still includes truck tolls. 

SLIDES: See Governor’s Budget Winners and Losers BELOW

“I liked the themes of jobs, economy, improving our economic climate, strengthening our pillars of a strong economy, education and infrastructure,” said Speaker of the House Nicholas Mattiello following the budget address. “It's a lot of bonding, and we'll take a look at it.  I really don’t have an opinion right now. The Governor suggested some worthwhile initiatives, but the question is can you justify them with the debt you have to incur.” 

In her second “State of the State” Raimondo touted the state' s 5.1% percent unemployment rate as of December 2015 — the biggest year-over-year drop of any state -- before delving into the details of her budget proposal for FY17 which calls for raise in the minimum wage to $10.10, an expansion of the state’s research and development tax credit, increased funding to the state’s public colleges an universities — and six general obligation bonds which could go before voters this November. 

They include: $45.5 million for higher education; $35 million for “recreation, green spaces and healthy communities;” $70 million for Quonset Port; $40 million for housing opportunities; and $40 million for school construction — and funding for a veterans home by “updating existing debt authority.”

Competing Interests 

"Our economy is making progress, but there is much more work to do to create growth that includes everyone," Raimondo said. "If we remain committed to growing 21st century businesses and attracting high-wage, high-skill jobs, I am confident that we will achieve our shared goal of creating jobs and expanding opportunity for all Rhode Islanders."

Raimondo, who touted that the FY17 deficit of $49.5 million is down 74% from the FY16 deficit of $190.4 million projected when she took office, focused on three segments in her budget proposal — “Skills That Matter,” “Jobs that Pay,” and “Opportunities for All.”

House Minority Leader Newberry, who spoke for the House GOP following the Governor’s address, praised the lack of tax increases, the focus on helping businesses with their unemployment tax premiums — which Raimondo said will save businesses $30 million -- and fully funding the funding formula as the “positives" in the budget.  

“However, it’s vanilla, and Rhode Island doesn’t need move vanilla,” said Newberry. “One of the major problems we see is the Commerce Corporation is given an enormous amount of money to essentially give to people it deems worthy of being donated money from by taxpayers. The budget books $35 million in saving for refinancing the debt from the past. That's a great thing, but we should take that and perhaps reinvest that in our roads and bridges. We shouldn't be just giving it to the Commerce folks.”

The Mayors of two of the State’s three largest cities had different reactions to the budget released on Tuesday. 

Providence Mayor Jorge Elorza said he had “liked what he heard” from the Governor. 

“I liked the continued focus on the economy, and putting people back to work is the highest priority the state,” said Elorza.  “I also applaud her focus on education. You'll hear a lot in the city on it this year. All our kids need is that opportunity, that door cracked open.”

Cranston Mayor — and former gubernatorial candidate -- Allan Fung said however that he did not have enough of the budget details to offer a reaction.

“I can tell you right now, we haven't still received one single data point or fact or number as to what Cranston's receiving, unlike past administrations,” said Fung immediately following the budget address. “We had a brief ten minute conference call yesterday, and they didn't tell any city or town what dollars we were getting in the budget. This is the first time in seven years I’ve seen this happening. So while everything sounds good, we don't know how it's paid for. We heard there was an increase [for cities and towns], but we just don’t know.”

Reactions Mixed

“Ka-ching, ka-ching, ka-ching.  That was the sound in my ears as Governor Gina Raimondo listed off all of the new and expanded initiatives that she wishes to implement in her budget at taxpayer expense,” said Monique Chartier with RI Taxpayers. “Many of her proposals are undoubtedly admirable and desirable.  But foremost, their funding requires revenue from a good tax base that is built upon a healthy economy - both of which, Rhode Island currently lacks.”

“The governor's proposals to reduce the cost of unemployment insurance, reform TDI and implement on-line permitting are welcome.  But they are one of only many reforms that need to be taken to improve the state's business climate so that businesses and jobs can grow.  Once again with her budget this year, the governor proposes to take baby steps when the state needs giant leaps,” continued Chartier. “Her request to expand taxpayer funded incentives to bring businesses to the state actually accelerates her in exactly the wrong direction for Rhode Island.  In order for the state's economy to improve, businesses need an across-the board improvement to the tax and regulatory climate.  The governor is choosing, instead, to hand out targeted tax breaks, which sends the signal that Rhode Island is open for business only if you happen to operate a business that is on a narrow list of preferred industries or services.”

The National Federation of Independent Businesses cited the changes to the unemployment tax as well as expanded e-permitting as two items they supported in the budget; they were not without their issues, however.

“Health care costs remain one of the greatest concerns of small business owners and the administration’s effort so curtail growth in healthcare costs are essentially to the state’s continued success,” said NFIB State Director Bill Vernon. “Last year 8400 new jobs were created, and we saw a drop in the state’s unemployment rate to 5.1%. Lawmakers must continue to focus on policies that lower the cost of doing business to bring continued job growth to the economy.”


Related Slideshow: Winners and Losers in Raimondo’s FY17 Budget Proposal

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School Infrastructure

An $80 million appropriation for construction and renovation, including of $9.1 million for the school building authority.

A $40 million general obligation bond to renovate and modernize school facilities with a focus on immediate health and safety, and investing in STEAM learning spaces.

A requirement that all schools post their actual budget online.

The Governor continues to address the pressing needs of the state’s children and the condition of the schools they attend in her FY17 budget proposal; the public could have the opportunity to follow-suit by approving the general obligation bond in November — or not. 

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While the Governor delved little into structural healthcare issues in her budget address on Tuesday (she did propose a multi-million dollar comprehensive strategy to address the opioid overdose epidemic which includes medication assisted treatments at the prisons, and $187,000 to combat lead poisoning), the Rhode Island Hospital Association immediately lauded the budget following its introduction, and addressed that while it is facing some reductions, that it "applauds" this years budget after landing on the "loser" list last year

“The Hospital Association of Rhode Island applauds Governor Raimondo’s commitment to strengthening our state’s health care system,” said Michael R. Souza, president, Hospital Association of Rhode Island.  “Although hospitals will face reductions in the proposed budget, we look forward to working with the General Assembly and Administration to implement lasting solutions that provide us the resources and tools necessary to transform the health care delivery system. Hospitals will continue to invest in innovation, technology, and a high-quality workforce with the continued support of our State partners.”

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Affordable Housing Advocates

Proponents of affordable housing opportunities in the state notched a preliminary victory by landing a spot in the Governor's’s budget.  Now they need to make it through the General Assembly — and garner approval from voters in November. 

Said the Housing Network of RI following Raimondo's budget address:

The Housing Network of Rhode Island and its membership of sixteen nonprofit affordable housing developers wish to thank Governor Raimondo for recognizing the importance of state investment in housing opportunities for low and moderate income Rhode Islanders. As we all work together to reinvigorate the state’s economy, affordable housing development plays a critical role in our state’s recovery plan. Governor Raimondo’s inclusion of an affordable housing bond in her FY 17 budget will not only stimulate the creation of new housing and boost economic growth by creating jobs in the construction, retail and service industries, but will also bring substantial additional outside financial resources into our state. 

Data shows that many Rhode Island households continue to struggle to find housing options that are affordable to them. According to HousingWorks RI, two in every five Rhode Island households are cost burdened, spending more than thirty percent of their income on housing. Governor Raimondo’s inclusion of an affordable housing bond recognizes this need and is a notable step towards addressing a major need of working class Rhode Islanders. We commend Governor Raimondo’s efforts and are grateful for her leadership on such an important issue.  

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Recent Grads

Raimondo continues to try to stave off the “brain drain” in Rhode Island by supporting incentives to keep recent college grads in the state.   

In her FY17 budget proposal, the Governor upped the Wavemaker Fellowship to $5 million to increase the loan forgiveness program, and through the Ocean State Grad Grant looks continue funding through RI Housing to provide recent college graduates with up to $7,000 in down payment assistance on a first home.

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Minimum Wage Increase 

Good for employees, not so much for business owners.  The Governor has proposed raising the state’s minimum wage to $10.10, making good on her campaign promise to do so (albeit one year later that planned).

The business community including the National Federation of Independent Business, who said that “any increase in the minimum wage will impact job create at small businesses for younger, less experience workers," continues to push back on the issue. The same arguments were made last year when the state raised the minimum wage to $9.60; watch and see if any new approaches are taken by employers during the session related to the issue. 

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Increase in Cigarette Tax

First blush win for the state — the state gets more revenue ($7.1 million) by increasing the cigarette tax twenty-five cents from $3.75 to $4.00.  The price per pack would still be less than neighboring Massachusetts ($9.78 in RI vs $10.18 if it goes through — it’s now currently $9.49 in RI). More Rhode Islanders might be deterred from smoking with the increased cost.

The National Federation of Independent Business, however, said the proposed increase in the cigarette tax will hurt small convenience stores. When CVS stopped selling cigarettes, those smaller stores undoubtedly saw the windfall.  Can they absorb a small tax increase?

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Medical Marijuana Caregivers - and State of Rhode Island

The RIDOH and DBR along with the State Police are calling for medical marijuana caregivers and cultivators to now pay an annual fee for a tag on every medical marijuana plant.  The state entities claim that “under current law, the caregiver market lacks accountability and oversight” as opposed to compassion centers.  The state agencies say that the tags amount to just 2 percent of the value of the marijuana produced. 

The Governor and the General Assembly however need to address an underlying issue that has plagued them since the implementation of the medical marijuana — which is that the oversight committee as mandated by law has never once met.  The state should be included on the “loser” list for failing to adhere to the mandate as required by law, as they would have the input from stakeholder and empirical evidence to what is working — or not — in the current law.  Instead, the state is clamping down with zero input from the community. 

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Home Care Agencies

The Rhode Island Partnership for Home Care blasted Raimondo's budget almost immediately after its unveiling:

“Governor Raimondo’s proposed budget does not provide for the substantial increase needed for home care agencies to comply with new federal and state mandates, the increased cost for delivering healthcare services in the home, the barriers that Rhode Islanders face when accessing home care, and the ability for home care agencies to retain direct care workers.”, said Nicholas Oliver, Executive Director of the Rhode Island Partnership for Home Care. 

While the Governor proposed a seven-percent increase for Medicaid home and community-based long-term services and supports, including personal care attendant services provided by contracted home care agencies, the Governor also proposed another increase in the state’s minimum wage from $9.60 per hour to $10.10 per hour, a 50 cent increase. Because the current average home care aide starting wage is $10.50 per hour, the proposed increase, earmarked toward direct care worker wages, increases the wage to a minimum $11.00 per hour, but without financial support for compliance to the employer mandate for health insurance coverage under the Affordable Care Act for home care agency employees and compliance with the U.S. Department of Labor overtime and travel rules impacting home care. Oliver added, “The Governor’s proposed increase is nothing more than an inflation adjustment that otherwise establishes a ninth consecutive year of frozen rates. This budget proposal does not reflect in writing what the Governor has publicly stated in the past year, such as the need to rebalance long-term care, the need to shift funding toward home and community-based healthcare services over nursing homes, and her interest to establish a comparable wage for home care workers to their counterparts throughout the healthcare sector.” 

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Fiscal Conservatives

Governor Gina Raimondo's budget proposal raised some eyebrows in Republican (and Libertarian) circles for the expansive role of the state government in market-based conditions. 

Justin Katz with the free-market Center for Freedom and Prosperity offered the following budget release. 

After budget addresses from progressive governors, free-market commentators frequently refer to the budget's focus on special interests, but Governor Raimondo's fiscal year 2017 budget is a stunningly special-interest budget.  Nearly every item is directly targeted toward a particular narrow group of recipients.  It's the kind of budget a chief executive puts forward when she doesn't trust the people of her state to make their own decisions.  For example, despite a projected increase of $85 million in income and sales taxes, next year, the governor offers offers no broadbased tax reductions.  In fact, she wants to add nearly $250 million in debt to the $300 million she wants to incur without voter approval for her RhodeWork's program.
In short, this budget doubles down on the strategy of remaking Rhode Island in the governor's image.  If you fit her vision for the state, there's money for you.  If you're one of the existing special interests, in Rhode Island, you'll like what you're getting.  But if you're a regular Rhode Island chasing your own dreams according to your own lights and supporting your own responsibilities, you'll find yourself holding the bill, and without subsidies. 

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Toll Opponents

It comes as no surprise that the Governor remains committed to pushing through her newly revised RhodeWorks plan — which includes truck tolls — to address the state’s infrastructure needs.  On Tuesday, Raimdondo said the state needs to “stop playing the politics of procrastination” with fixing the state’s bridges and roads.

Pay-go proponents — as well as public-private partnership ones — will have a short window to contest the Governor’s new plan to have a $300 million Garvee bond in order to support the program, which is on the fast track for consideration at the General Assembly with the Speaker’s stated goal of sealing the deal before the body breaks for February vacation.

Expect the opposition to remain heated in these coming weeks, however. 


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