On a 14-2 margin, the House Finance Committee Thursday approved an $8.7 billion budget for the fiscal year starting July first. Lawmakers say they hope tax cuts will bolster Rhode Island’s underperforming economy.
The House Finance budget cuts the corporate tax rate, from 9 to 7 percent, and increases the exemption on the estate tax to $1.5 million. It fully funds the state education formula and includes most of more than $200 million in ballot questions proposed by Governor Lincoln Chafee. House Finance Chairman Ray Gallison said the hope is that the spending plan will trigger economic growth.
"The budget also accomplishes the goals the speaker has set for jobs and economic development and in improving the image of the state of Rhode Island,” said Gallison.
The budget also removes funding for a state historic tax credit, and does not include money for 25 million dollars in state employee pay raises negotiated by Chafee. The spending plan does include more than 12 million dollars to pay back investors in 38 Studios. The full House is slated to take up the budget next Thursday.
The controversial Sakonnet River Bridge toll will be eliminated as part of the budget plan.
Lawmakers propose paying for a new infrastructure fund by adding a penny to the 33-per-gallon gas tax in 2015, and the indexing that tax to the rate of inflation. The cost of getting a vehicle inspection every two years would climb from $39 to $55 , and a court cost fee for using a good driver discount would double to $50. House Speaker Nicholas Mattiello says the added expenses are worth it to help maintain roads and bridges.
“We are going to better our infrastructure across the state while eliminating the tolls on the East Bay, and there’s no single burden that we’re imposing on anyone that’s oppressive," Mattiello says. "It’s a good fund – it’s going to serve our state well.”
If approved in the final legislative budget next week, the infrastructure fund will steer more than $14 million a year for keeping up bridges in the East Bay and Aquidneck Island. Millions more would go for other road and bridge improvements, and RIPTA would also get some added funding.
The Greater Providence Chamber of Commerce praised the House Finance budget.
“Many of the reforms and investments included in the House budget will help Rhode Island improve its business climate, strengthen economic development efforts, and get Rhode Islanders back to work,” chamber president Laurie White said in a statement. “We are pleased to see clear action being taken by Speaker Mattiello and House lawmakers to keep our economic recovery at the forefront and to move Rhode Island forward. We urge the House to pass this bill and send it to the Senate for approval.”
The Rhode Island Coalition for the Homeless praised the inclusion in the budget of money to support affordable housing and try to prevent homelessness.
But the conservative Rhode Island Center for Freedom and Prosperity rapped the methods used to pay for the infrastructure fund and avoiding Sakonnet tolls.
"While the modest corporate and estate tax reforms will be helpful over the long term for those constituencies, we then simultaneously turn-around and add to the plight of the average guy, asking them to pay for those reforms by imposing new vehicle fees and gas and use taxes," Mike Stenhouse, CEO for the center, said in a statement. "Nor does this budget have any bold jobs creation plan. If we also cut the sales tax, we can put money back in the pocket of every Rhode Island family and business, and create thousands of new jobs right away."
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