I hope you have time today to celebrate and reflect upon the significance of Juneteenth, commemorating the date in 1865 in which the message of the abolition of slavery in our country finally reached all of its citizens. I commend to you Senator Mack’s Resolution describing some of the holiday’s historical background. For example, I was interested to learn that beginning before the Civil War, Rhode Island’s African community celebrated August 1 as Emancipation Day, marking the abolition of slavery in the British Empire. This week’s letter will discuss the House of Representatives budget that was passed last week.
The Legislative Budget
Last Thursday, the Rhode Island House of Representatives passed its version of the State budget, which tracks closely the Budget proposed on June 9 by the House Finance Committee. The Senate is scheduled to take up the House budget this Wednesday (June 22), at which time it will consider various amendments proposed by individual Senators. While it is possible that those amendments will produce modest adjustments, the House budget resulted from an agreement between and among leadership of both chambers, and while I personally would have preferred some shifts in priorities, I plan to vote in favor of it should it retain its current basic outlines.
At the beginning of this session, the Governor introduced his budget which is summarized by the Senate Fiscal Office here. The House budget incorporates a total of 352 changes to the Governor’s budget that are summarized here. I will now offer a high level summary of those changes that reflect the ways in which the General Assembly changed the State’s funding priorities.
1. Tax Savings
Following the presentation of the Governor’s budget, stronger projected State revenues for the current fiscal year provided an opportunity to return some tax savings. The General Assembly selected two. First, the budget contains a one-time child tax credit of $250 per child for up to three children of any parents whose income was at or below $100,000 (individual return) or $200,000 (joint return), resulting in the return of approximately $44 million in tax revenues. Second, the budget accelerates by one year the complete phaseout (through a State subsidy) of local motor vehicle excise taxes, a commitment of an additional $63.9 million in State revenues.
In the House, legislators debated an alternative tax savings from suspending the State gasoline tax (currently at 34¢/gallon). The opponents argued that gasoline station operators in Massachusetts and Connecticut had kept much of those states’ fuel tax reduction as profits, thereby reducing significantly the savings enjoyed by fuel purchasers.
2. The Safety Net
As noted in my previous letters, the Senate Finance Committee heard extensive testimony concerning the fraying of the State’s “safety net” through inadequate payments to providers of such services as home health agencies, nursing homes, hospitals, childcare, and children’s therapeutic and respite services (among others). The legislative budget commits another approximately $95 million (divided almost evenly between State general revenue funds and matching federal funds) for this purpose.
3. Support For Businesses
The Governor’s budget included approximately $36 million in programs to direct aid to businesses and small businesses that the General Assembly redirected (along with another approximately $35 million) into replenishing the unemployment insurance fund, which was depleted by the pandemic, and which is funded by assessments on businesses. In my observation, many of these direct aid programs were designed to “make businesses whole” for losses they sustained during the pandemic without clearly targeting the relief to businesses that required the aid in order to continue operations. The General Assembly’s substantial investment into the unemployment insurance fund will likely produce a significant reduction in the employer assessment, providing relief to all businesses.
4. Affordable Housing
The legislative budget increases funding for affordable housing from the $250 million in the Governor’s budget by providing $10 million more for low-income housing vouchers and $5 million more for transitional housing for the homeless, as well as $25 million more to subsidize heat pumps for low- and moderate-income households. I requested a significantly larger commitment of additional funds for affordable housing, and this area represents my largest regret in a budget that accomplishes many desirable goals.
5. Additional Major One-Time Programs
The legislative budget includes these additional one-time programs:
· $45 million in additional aid to hospitals
· $30 million in additional aid to nursing homes
· $10 million in additional funding to nonprofits providing relief from the impacts of the pandemic
· $5 million for adult education
6. Non-funded American Rescue Plan Act Programs
The legislative budget does not include funding for these American Rescue Plan Act programs proposed in the Governor’s budget:
· Municipal Learning Centers ($15 million)
· Higher Education Academies ($13.5 million)
I support both of these decisions, as neither program contained sufficient clarity about its design, its coordination with overlapping existing programs and/or the measurable criteria it would use to define the success of the program.
7. Miscellaneous Programs
The legislative budget included full funding of the State’s Payment In Lieu of Taxes program, providing Providence with approximately $1.5 million in additional funds to compensate for the property tax revenue lost to tax-exempt owners.
The legislative budget included a $2.3 million subsidy to RIPTA, which will allow it to operate fare-free service on its R-Line.
Conclusion
Between the federal American Rescue Plan Act budget and the surplus State budget, the Governor and General Assembly had the opportunity to “think big” about “once in a lifetime” investments. I was surprised to see how much of the money had to be used to close longstanding deficits from the past (such as inadequate funding of our “safety net”) as opposed to investing in a better future. As a result, many of these “one-time” expenditures may provide only a temporary resolution of needs we will have to continue to address in the future.