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Fri June 20, 2014
Scott MacKay Commentary: Chafee, Lawmakers Approve Moderate Budget
The usual special interest groups are blasting the new state budget approved by the General Assembly. But RIPR political analyst Scott MacKay says maybe lawmakers did the best they could in tough times.
Rhode Island’s General Assembly has approved an $8.7 billion taxing and spending plan for the financial year that begins July First. This budget has drawn fire from the usual suspects who roam the marble Statehouse corridors lobbying for their causes.
Conservatives, such as the Rhode Island Center for Freedom and Prosperity, are not pleased that the budget did not include more tax cuts, particularly the sales tax. On the left, the Economic Progress Institute is upset that lawmakers cut the estate taxes paid by wealthier Rhode Island families.
And a cacophony of groups that cross pollinate Rhode Island’s political left and right are miffed that the Assembly included $12 million of taxpayer money to pay the next installment of the state-backed bonds that floated the ill-fated 38 Studios video game company.
The spending plan does not raise the broad-based sales and income taxes paid by virtually every Rhode Islander, a good move in our recession-racked corner of southeastern New England. The budget shaves the corporate tax from nine to seven percent, which the business community (and Gov. Lincoln Chafee) has advocated for years. And it provides relief for wealthy who pay estate taxes by raising the credit from the current level of about $922,000 to a threshold of $1.5 million and makes other changes that slash taxes for heirs of the well-off.
After years of squeezing public education, the Assembly is finally reversing course. The new spending blueprint adds $33 million more in state aid to education funding and $10 million more to finance tuition in-state tuition freezes at the University of Rhode Island, Rhode Island College and the Community College of Rhode Island. Lawmakers also approved two of Chafee’s education priorities, a new shared URI-RIC nursing school in Providence’s historic Jewelry District and asking voters to support a bond issue to build a new engineering school at URI.
As is the case in every budget, lawmakers booted the can down the sidewalk on transportation. Bowing to an uproar in communities on the East Side of Narragansett Bay, the Assembly eliminated tolls for the Sakonnet Bridge. Instead, the gas will be boosted by a penny in July and motorists will pay higher car inspection fees. Inspection fees will jump from $39 to $55.
Call this band-aid shortsighted. You’re right. Linking transportation improvements to gas taxes is a no-win strategy at a time when cars are getting better gas mileage every year. So the Assembly will be forced to come back next year and hopefully devise a funding stream that takes into account 21st century realities.
The Assembly also nixed Chafee’s call for financing the Historic Preservation Tax Credit at a $52 million cost to taxpayers. This, too, is shortsighted, given Rhode Island’s long history of being a national leader in restoring and reusing historic buildings. But lawmakers had no stomach this year to raise taxes to pay for even such a worthwhile program.
Given the turmoil in the House, it was probably too much to expect lawmakers to enact big changes in current spending and taxing. House Speaker Gordon Fox’s State House lair and his home were raided by state police and federal agents in March. Fox stepped down the next day and Cranston Democrat Nick Mattiello took over the speaker’s gavel. A new House Finance chairman, Bristol Democrat Ray Gallison assumed control of the most important budget committee.
Despite this upheaval, the budget process was orderly. It wasn’t, of course, perfect. Lawmakers did little to address long-term deficits or handle such prickly questions as how to pay over the long term for HealthSourceRI, Rhode Island’s Obamacare program.
But politics is rarely about ideals. More often it is about taking as many steps, even baby steps, as possible to achieve a goal. Sometimes that end really is doing the best one can in the worst of times.
Scott MacKay’s commentary can be heard every Monday at 6:35 and 8:35 on Morning Edition and at 5:50 on All Things Considered. You can also follow his political reporting and analysis at the On Politics blog at RIPR.org