Raimondo Unveils $9.37B Budget For FY2019; No Broad-Based Tax Increases

Jan 18, 2018

Raimondo during her State of the State address earlier this week.
Credit Ian Donnis / RIPR

A $9.37 billion budget unveiled Thursday by Gov. Gina Raimondo closes a $260 million deficit for the current and next fiscal year

, avoids broad-based tax increases, calls for a November ballot question to steer $250 million to fix crumbling schools, introduces new co-pays for the one-third of Rhode Islanders on Medicaid, and banks on $23.5 million in new revenue from sports betting at Twin River.

In a letter to the General Assembly, Raimondo described her spending proposal as a way to prioritize investments in education and job creation in a tough budget climate.

"After a lost decade, Rhode Island is finally on the move again," she said in the introduction to her budget. "We're making real progress to put Rhode Islanders back to work. I'm in this for the long haul and members of the Rhode Island General Assembly are too."

But critics including the Republicans seeking to challenge Raimondo for re-election in November may criticicize  the budget for relying on too many assumptions. A case in point is a pending U.S. Supreme Court decision in a sports betting case brought by Chris Christie, the Republican governor of New Jersey. Raimondo's budget counts on $23.5 million in new revenue, based on a belief that Twin River will be able to begin offering sports betting at its facilities starting in October.

"We think this is a very realistic option," Jonathan Womer, director of the state Office of Management and Budget, said during a briefing at the state Administration building. He pointed to uncertainty in Washington "across the board .... As a state we'll have to remain flexible."

(The state is also counting on the federal reauthorization of the Children's Health Insurance Program.)

If the Supreme Court approves a nationwide expansion of sports betting, administration officials said it would be introduced at Twin River's facilities in Lincoln and Tiverton, although there could possibly be an online component in the future. Betting would be prohibited on Rhode Island-based sports teams.

The spending plan continues the phaseout of the car tax championed by House Speaker Nicholas Mattiello -- a measure that will cost the state about $225 million to reimburse cities and towns each year once it's completed.

The budget avoids broad-based tax increases, but it proposes a 25 cent hike in the cigarette tax, introduces new co-pays for Rhode Islanders receiving Medicaid, the subsidized health care program for the poor, and expands the state sales tax to include cloud-based services (not including streaming services).

Eric Beane, secretary of the Executive Office of Health and Human Services, offered this response when asked how new co-pays for Medicaid -- ranging from roughly $1 to $8 -- will affect access to healthcare: "I think the most important thing for Rhode Islanders to hear is that if they're eligible for Medicaid today they're going to be eligible for Medicaid after these proposals. One of the governor's top strategic priorities is insuring that every Rhode Islander has access to health insurance, so in this budget there are no cuts to eligibility that are proposed."

According to budget documents, Raimondo has raised investments in education and job efforts by almost 4 percent, or almost $270 million, as a percentage of general revenue by fiscal year since 2015.

The General Assembly will hold a series of hearings on Raimondo's budget proposal in the months to come. The legislature usually makes some changes to the governor's spending plan before passing a revised version, typically in June.

Here's a breakdown of some key budget areas:

EDUCATION

The governor's budget includes $1.1 million in new state funding to expand pre-K education; an additional $260,000 for a computer science education initiative; and an additional $1 million in funding for each of the state's three institutions of higher learning. Another $4 million is envisioned to replicate in northern Rhode Island a program like a higher education center in Westerly. There's an additional $3.6 million in funding for the Rhode Island Promise Scholarship fund at the Community College of RI.

BOND QUESTIONS

Raimondo proposed four question on the November ballot representing a combined $368.5 in envisioned borrowing: $250 million to launch the first phase of a $1 billion to overhaul Rhode Island school buildings; $45 million for improvements to URI's Narragansett Bay Campus; $25 million for renovations of Rhode Island College's Mann Hall; and $48.5 million "to protect RI's coastline, dams, drinking water & open space," and for "remediating industrial sites for redevelopment and improving RI's recretational facilities."

DEFICIT

The $204 million deficit for fiscal year 2019 is eliminated, according to state budget documents, mostly by reducing expenditures, as well as new revenues, changes at the state Department of Revenue, and scooping more than $10 million from quasi-public agencies. Beyond the $23.5 million in revenue expected from sports betting, the state is counting on $5.1 million from increased compassion center revenue; a $6.2 bump in taxes for cigarettes and tobacco, and $14.5 million in new sales tax revenue.

A $60 million deficit for the current budget year was closed through most reduced expenditures, through also transfers and relaying a transfer in more DMV revenue to the state Department of Transportation for one year.

JOBS/BUSINESS

Raimondo proposed $500,000 for SupplyRI, a new effort meant to encourage large institutions to buy things from small local businesses. The governor also proposed a package meant to simplify the process of doing business in the state, by, for example, by eliminating unnecessary licenses and removing small fees for filing complaints or business applications.

MEDICAL MARIJUANA

Raimondo calls for increasing the number of compassion centers in the state to 15, up from three; adding acute pain as an eligible condition for medical marijuana; and allowing Connecticut and Massachusetts patients to get medical marijuana in Rhode Island.