NEW: Governor Signs Budget into Law

Saturday, June 16, 2012


With the governor’s signature today, following the General Assembly’s passage, the $8.1 billion state budget bill for the 2013 fiscal year is now law.

The plan substantially restores previous cuts to programs for the developmentally disabled, accelerates implementation of the new school aid formula and assists Central Falls’ retirees, while avoiding many of the tax increases Governor Chafee proposed, including the expansion of the meals tax.

The budget (2012-H 7323Aaa) reflects the increased resources available from the May Revenue and Caseload Estimating Conference to eliminate the governor’s proposed acceleration of fee increases at the Division of Motor Vehicles, which will instead be phased in over three years beginning in 2014, as originally intended.

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It reinstates $9.6 million in state and federal funding for programs for the developmentally disabled to restore a substantial portion of funding reductions made this year. It also maintains dental coverage for adults on Medicaid, which had been on the chopping block when the budget was first introduced but was restored from a combination of state funds and money from the Neighborhood Health Plan.

The budget includes $22 million to fully fund the second year of the new state education aid formula, as well as an additional $11 million, as the governor proposed, to accelerate the implementation. Additionally, the proposal includes the governor’s plan to give cities and towns a break on “maintenance of effort” – a requirement that their local contribution to schools not fall below what it was the year before – so they can exclude the local share of specific non-recurring expenses that no longer exist, such as debt that has since been paid off.


To assist struggling municipalities, legislators concurred with the governor’s proposal to accelerate state aid payments to distressed communities, which are currently distributed in two payments, into a single payment. The bill also changed the schedule for school aid distribution so districts will have more of their aid at the start of the school year.

The final version of the bill stripped the budget of the governor’s proposal to raise the tax on restaurant meals from 8 percent to 10 percent, and also rejects an expansion of the hotel tax to include vacation rentals. Additionally, it repealed a tax enacted last year on scenic tours and transportation services.

While the bill does subject luxury clothing costing $250 or more to the sales tax for the first time, a change expected to generate $5.9 million for the state, and makes taxi and limousine rides and pet services other than veterinary costs subject to the sales tax, the bill was amended to eliminate a provision to add car washes to the sales tax.

Legislators concurred with the governor’s proposal to raise the cigarette tax from $3.46 to $3.50 per pack, to raise $1.8 million. They also kept intact the governor’s proposal for a 75-day amnesty period in the fall when delinquent taxpayers can pay back taxes without penalty, with a 25-percent reduction on interest, with an estimate that $10.9 million in unpaid taxes will be collected.

The bill includes $209 million in bond questions that will appear on the November ballot, including $50 million for modernization of Rhode Island College, including upgrades to its present nursing school facility; a new $94 million proposal for a new Veteran’s Home and assisted living facility and rehabilitation of the current facility; a $25 million bond to build affordable housing, $20 million for clean water and drinking water infrastructure and $20 million for open space and recreation (to which another $5 million of existing, non-borrowed funds will be added). The budget eliminates the need for a previously approved $21.5 million transportation bond by paying for the proposal, which includes the state match for upgrades to the Rhode Island Public Transit Authority bus fleet, through existing funds, without borrowing.

The bill includes the beginning of a process of streamlining the work of the Board of Governors for Higher Education and the Board of Regents for Elementary and Secondary Education, creating an 11-member Board of Education to help coordinate the state’s education systems to ensure that students graduating from high school are fully prepared for college.

For business, funding was included to institute electronic business permitting to make it easier to do business in Rhode Island. Also, the bill expands the field for those who can apply to the film and television tax credit program, adding theatrical and musical touring productions mounted in the state and allowing smaller-budget documentaries to apply, but also sunsets the tax credit in 2019. The proposal also sets a $5 million cap for each individual production (within the $15 million cap on the program overall), and adds a new rule excluding any entity from receiving the tax credit if they apply for a state loan or loan guaranty.

The amended bill does not alter the governor’s proposal to transfer control of the Sakonnet River Bridge to the Rhode Island Turnpike and Bridge Authority.

Among the proposals by the governor that were not included was a plan to lower a charge on telecommunications that funds school technology, but expand it to include cellular telephones, meaning cell phone users will not see a new 15-cent a month monthly surcharge on their bills. The budget, however, does provide the governor’s $20 million proposal for technology upgrades in local schools.

Also eliminated were Chafee’s proposals to end reimbursements to school districts for books they provide to students in private and parochial schools and for administrative costs of providing school breakfast.


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