Raimondo Touts $9 Billion Budget As Investment In RI's Future

Feb 2, 2016

Governor Gina Raimondo unveiled a $9 billion budget Tuesday night, touting it as a way to grow Rhode Island's economy while making the state more hospitable to business.

The governor's second State of the State speech -- slightly longer than 30 minutes -- dovetailed with Raimondo's persistent theme of acknowledging Rhode Island's fundamental problems and trying to overcome them. Yet House Republicans were unimpressed by the budget plan.

Raimondo started by telling a story about talking with a man at the Stop & Shop at Branch Avenue in Providence after church one Sunday. The governor said the man told her he did not mind working hard, but just couldn’t get enough work to stay ahead of his bills.

"I think about that the guy and the countless people like him every day, from the time when I wake up to the time I kiss to my kids to bed at night," she said. "What’s on my mind is helping people like him, growing this economy, creating jobs and making Rhode Island a place of opportunity for everybody."

In a conciliatory note toward lawmakers, she closed her address by calling for people to work together on tough issues. "We won't always agree, but we are bound together by a love for Rhode Island, and a commitment to lift up our state," she said.

In an earlier letter to the General Assembly, Raimondo said her second spending plan "has five main themes to continue Rhode Island's comeback: Building skills that matter by developing a first-class educational system and workforce; Make it cheaper and easier to do business and to grow well-paying jobs; Make government more innovative, efficient, and responsive to the public; Protect the health and safety of Rhode Islanders; and Make fiscally responsible decisions to support long-term growth and close the deficit."

In offering the Republican response, House Minority Leader Brian Newberry (R-North Smithfield) praised some elements of the budget, including increased education funding, an overhaul of the state's unemployment insurance system, and an absence of broad-based tax increases. But he also characterized the spending plan as "vanilla" -- a palatable document designed to win support in an election year, Newberry said, although not one really worthy of support.

"I think you’re going to find this budget is very vanilla, but that’s exactly the problem," he said. "Rhode Island doesn’t need vanilla. Rhode Island needs more than vanilla. Rhode Island needs something, as the governor said, if you listen to her speech, I agree with her focus on economic development, but Rhode Island needs more bold moves."

Raimondo's spending plan includes what her office calls investment "at record levels in our educational system and workforce."

It also incorporates a number of the recommendations made last month by the Brookings Institution, including steering $2.75 million (to be matched by other funding sources) "to support hiring faculty with record of commercializing research": using"cluster grants" and "innovation vouchers" meant to spark job growth; and seeking to use $20 million from a November ballot referendum question to create to create an "innovation center" meant to commercialize promising research. 

One of the largest sources of new revenue, about $10 million, would come from a proposed tax on marijuana plants.

On the business climate front, state officials said changes to Rhode Island's unemployment insurance program will save businesses $30 million a year, although companies that use the UI system most frequently will also be among the beneficiaries. The Tax Foundation currently rates the state's UI system the 49th worst in the country.

Raimondo proposes increasing Rhode Island's minimum wage, to $10.10 an hour, while avoiding broad-based tax increases.

She also want to increase the earned-income tax credit from 12.5 percent to 15 percent; and in what is billed as a move to attract more workers, raising wages for home healthcare workers by about 7 percent to expand home-based services.

Here's a list of the general obligation bonds proposed by the governor for the November ballot.
Credit Ian Donnis / RIPR

Raimondo's budget includes about $5 million to expand a research and development tax credit. The governor also proposes to put ballot questions representing $230.5 million in spending on the November ballot. Of $45.5 in proposed higher education spending through a bond question, $25.5 million would go for the second phase of URI's engineering school, while $20 million would help to create an "innovation center" meant to spark jobs and commercialized research.

The governor invited a series of guests to her second State of the State address, including Elise Reynolds, the mother of two sons who overdosed on drugs, and her husband, Richard; Genesis Sanchez Taveras, a RIC student, who is a Rhode Island Promise Scholar; Cumberland High School Principal Alan Tenreiro, the 2016 national principal of the year; RI Kids Count Executive Director Elizabeth Burke Bryant; Everett Fernald, the president of Greystone, a Lincoln company that is expanding with the help of a state credit; Rhonda Price, chief executive officer and founder of Man Up Inc.,; and Pete Rumsey, executive VP of business development, and Philip Ragona, executive VP and general counsel of Lighting Science Group Corporation, a company that opened a Rhode Island location with Raimondo's encouragement.

The governor's spending plan wipes out a $50 million deficit for the fiscal year starting July 1, in part through a larger than expected surplus and an uptick in state revenues.

It includes an additional $33.4 million in school aid, and allows six communities where five percent or more of the students attend a charter school to retain $350 per-pupil for every student that leaves for a charter school. As Raimondo announced Monday, the state will spend $500,000 to make PSAT and SAT tests free for all sophomores and juniors in public high schools.

On higher education, the governor's spending plan offers $7 million more in aid, plus $10 million in capital funding, to help URI, RIC and CCRI avoid tuition increases.

The budget raises the per-pack cigarette tax from $3.75 to $4. The governor's office said the increase will raise $7.1 million in revenue while keeping the price of cigarettes in Rhode Island ($9.78) cheaper than in Massachusetts ($10.18).

The governor's office said Raimondo's spending plan reduces Rhode Island's long-term deficits, including from $377 million to $272 million for fiscal year 2020.

Also part of the spending plan: using $700,000 to create an online searchable database of state regulations; $500,000 to increase the number of communities with e-permitting from 10 to 25; and making available $1.5 million to initially subsidize new air routes for T.F. Green Airport.

Raimondo anticipates $39 million in Medicaid savings in the new fiscal year, including $20 million from the costly IT project known as the Unified Health Infrastructure Program.

The budget $2.5 million for the state Department of Corrections "for medication-assisted treatment programs," in an attempt to reduce opioid overdoses.

The spending plan will move to the General Assembly, where lawmakers traditionally make a series of changes before passing the budget, usually in June.

This post has been updated. More updates coming.