Senate approves, governor signs 2018 budget bill
STATE HOUSE – The Senate today approved and the governor signed into law a $9.2 billion 2018 state budget bill that includes excise tax relief, along with a separate bill protecting taxpayers in case the economy sours.
The Senate vote was a reconsideration of the chamber’s vote on the bill on June 30. Today’s vote removed an amendment the Senate placed on the budget in June concerning the six-year excise tax relief plan introduced by House Speaker Nicholas A. Mattiello, ending a month-long impasse and sending the budget to the governor, who signed it moments after its passage.
Instead of the amendment, the Senate also passed a separate bill (2017-S 1011), sponsored by Senate President Dominick J. Ruggerio (D-Dist. 4, North Providence, Providence), mandating that the director of revenue file annual reports with both the Senate and the House and provide recommendations regarding the motor vehicle phaseout. The first report is due January 1, 2021. The House has committed to returning, along with the Senate, on Sept. 19 to take up that bill and others that were in the balance when the stalemate over the budget occurred.
“We have come to an agreement that allows us to move forward with the business of the state, allowing the excise tax phaseout while still providing protections that will monitor its economic feasibility for the state,” said Senate Finance Committee Chairman William J. Conley Jr. (D-Dist. 18, East Providence, Pawtucket). “While the excise tax has been the focus for several weeks, it’s important to remember that it’s just one part of the budget that does much more. In a difficult year where we faced lower-than-anticipated revenues, I’m pleased that we were able to maintain the progress we’ve made at reducing taxes while restoring no-fare bus passes for low-income elderly and disabled Rhode Islanders, and increasing funds to hospitals and nursing homes. This is a budget that bridges the shortfall without hurting those who can least afford it and without any broad-based tax hikes. It helps maintain and restore services to Rhode Islanders to the greatest extent possible with the resources we have, and I’m glad that we were able to push it over the finish line today.”
The bill (2017-H 5175Aaa), which passed the Senate 30-5 today and passed the House June 22 on a 64-11 vote, eliminates the $134 million shortfall that opened up in May, raises the minimum wage, restores no-fare bus passes for low-income elderly and disabled people, includes a pilot program to provide two years of free tuition at CCRI and once again does not include any broad-based tax increases.
The plan includes a 90-cent increase in the minimum wage over two years, raising the wage to $10.10 on Jan. 1, 2018, and to $10.50 on Jan. 1, 2019. If enacted, it would make 2019 the sixth year out of seven that that the Assembly raised the minimum wage.
The excise tax relief plan included in the budget begins eliminating the car tax by reducing the taxable portion of a car’s retail value from 100 percent to 95 percent and increasing the minimum exemption from $500 to $1,000, and capping the rate at $60 in 2018. It also stops taxing cars that are 15 years or older immediately. It continues reducing the taxable value and maximum rates and raising the minimum exemptions through 2023, with the tax completely eliminated in 2024. The budget fully reimburses cities and towns for the lost revenue, a cost of $26 million in 2018.
The bill restored a program that provided no-fare Rhode Island Public Transit Authority (RIPTA) bus passes to low-income elderly and disabled people. While Gov. Gina M. Raimondo’s proposal partly restored the program, the plan approved by lawmakers will fully fund the program for two years at the cost of $5 million per year. Over this two-year period, the General Assembly is requesting that the administration find a permanent solution so that vulnerable Rhode Island residents will continue to have access to the passes. Beginning in February, elderly and disabled Rhode Islanders who meet income-eligibility requirements had to pay 50 cents a ride, plus 25 cents for transfers. This provision was allowed to become effective July 1 under a separate bill that passed the Assembly June 30.
The Assembly continued commitments made in previous years to economic development initiatives through the Rhode Island Commerce Corporation, such as extending the sunset on the historic tax credit program for two years and expanding access to the innovation incentive for manufacturers. Increases to other incentive programs were more modest than in the governor’s proposal.
Lawmakers concurred with the governor’s proposal to enhance efforts to have online retailers collect sales tax. Amazon.com began doing so voluntarily this year.
The bill includes proposed raises for state-subsidized home health care workers and those who serve the developmentally disabled, as included in the governor’s proposal. The measure is meant both to ensure quality care for the disabled and to provide relief for workers in an industry where wages are low, despite workers’ tremendous responsibilities.
The Assembly added $10 million for nursing homes and also included the new health system transformation program that leverages another $23.5 million in federal funds, including $13.5 for hospitals, in 2018, and another $7 million for nursing homes in the current year’s budget.
The plan fully funds the seventh year of the state education funding formula, increasing education aid by $46 million. The Assembly plan makes permanent a pilot effort in the current year to provide a total of $2.5 million in extra funding for schools with high numbers of English-language learners, as well as permanently funding recovery high schools, which were previously funded only for this year. It also includes an additional $1.1 million for early childhood learning programs.
Davies Career and Technical High School will receive a $3.6 million upgrade under the budget as part of additional financial help for the manufacturing industry.
Legislators included a compromise on the governor’s proposal to provide two years of free tuition to students at state colleges. It will be a four-year pilot program to provide two years at the Community College of Rhode Island, with requirements that students maintain a 2.5 GPA and stay in Rhode Island following graduation. It also requires evaluation and reporting to the General Assembly on the effectiveness of the program.
To help close a $134 million shortfall caused by lower-than-expected revenues and higher-than anticipated spending, lawmakers maximized resources, looked for efficiencies, declined to create many new positions throughout government and made a $25 million cut in general government spending, as well as decreasing the General Assembly’s budget by $2 million and making moderate cuts to smaller programs.
The Assembly concurred with the governor’s proposal to raise the cigarette tax from $3.75 a pack to $4.25, a year after declining a 25-cent hike she proposed last year. The increase is expected to raise an estimated $7.5 million in new revenue. Lawmakers also helped taxpayers by adding a limited tax-amnesty program intended to capture $12.5 million in additional revenue.
With those efforts, lawmakers were able to fund the proposal without any broad-based tax hikes and without any cuts to local aid.
For more information, contact:
Greg Pare, Press Secretary for the Senate
State House Room 314
Providence, RI 02903