2020 state budget bill signed into law
STATE HOUSE – The governor today signed into law the state budget bill approved by the General Assembly last week. The $9.97 billion budget for the 2020 fiscal year largely avoids new taxes while strengthening education, continuing the car-tax phase-out and maintaining municipal aid, and closes a $200 million budget gap.
“I am pleased that this pro-business, pro-education budget has gone into law today. This budget adheres to the fundamental principles we have established by properly funding essential services, while respecting the limit on how much we can ask of our taxpayers. I am particularly proud that we are fully funding a commitment to phase out the car tax,” said House Speaker Nicholas A. Mattiello (D-Dist. 15, Cranston).
Said Senate President Dominick J. Ruggerio (D-Dist. 4, North Providence, Providence), “I’m proud that this budget reflects many of the Senate’s most important priorities. Among those priorities are funding for pre-kindergarten programs, free RIPTA bus passes for low-income elderly and disabled, the opioid stewardship program, hospitals, and expansion of Rebuild RI to include historic projects. We also worked hard to ensure less reliance on scoops and one-time revenue sources.”
The bill (2019-H 5151Aaa) restores full funding for the third year of the phase-out of the automobile excise tax, a program instituted through legislation sponsored by Speaker Mattiello. In the budget she submitted to legislators earlier in the year, the governor had proposed slowing down the phase-out, which is set to be complete after FY 2023.
The Assembly did not include the governor’s proposal to institute a new fee on large businesses whose employees are enrolled in Medicaid programs, nor did it include her proposal to expand the sales tax to include lobbying services, design services and commercial building contracts for services like cleaning and landscaping. It also declined to increase the hotel tax and didn’t include a new excise tax on firearms and ammunition. Lawmakers did let one part of her sales tax expansion stand: digital downloads and streaming services like Netflix will be subject to the sales tax.
Legislators added the elimination of the “tampon tax” to the budget, agreeing to make feminine hygiene products exempt from sales tax, a proposal originally put forth in separate legislation (2019-H 5307, 2019-S 0049) by Rep. Edith H. Ajello (D-Dist. 1, Providence) and Sen. Louis P. DiPalma (D-Dist. 12, Middletown, Little Compton, Tiverton, Newport). Of the 45 U.S. states that collect sales tax, 10, including Massachusetts, Connecticut, New York and New Jersey, currently exempt feminine hygiene products. The Assembly also added urns to the list of funeral items that are tax exempt, as proposed in a separate bill (2019-H 5157, 2019-S 0054) sponsored by Rep. Arthur J. Corvese (D-Dist. 55, North Providence) and Sen. Frank S. Lombardi (D-Dist. 26, Cranston). All tax changes take effect Oct. 1.
The Assembly also added proposal (2019-H 5576), 2019-S 0564) by House Majority Leader K. Joseph Shekarchi (D-Dist. 23, Warwick) and Sen. Mark P. McKenney (D-Dist. 30, Warwick) to provide a work-around for owners of “pass-through” entities whose state and local taxes exceed the new $10,000 cap on the state and local tax (SALT) deduction on their federal tax returns, instituted under the changes to the federal tax codes passed by Congress in December 2017. The change will allow pass-through entities, such as limited liability companies (LLCs), S corps, partnerships and sole proprietorships, to pay the state tax on their business income, instead of passing it along to their partners to claim on their personal income tax returns. Based on legislation enacted in Connecticut, it is expected to be revenue-neutral for the state.
Legislators rejected the proposal to increase the cigarette tax by 25 cents per pack and 30 cents on cigars, based on the impacts on small businesses, particularly border-town convenience stores who also benefit from sales of other products to people who come in to buy tobacco products.
While the Assembly kept the governor’s proposed increases to campsite and other fees at state parks to fund park and beach maintenance, it rejected an increase in beach parking fees, instead opting to freeze beach parking at the current rate through the 2021 season.
The General Assembly left economic development programs largely the same as they were in the 2019 fiscal year, other than the Rebuild RI economic development program, which got authority to offer an additional $60 million in future credits and a six-month extension, but with some new limits.
Lawmakers also included the creation of the Rhode Island Small Business Development Fund, which would encourage the formation of private capital investment in small business by federally licensed investment companies. That initiative was introduced as a separate bill (2019-S 0055, 2019-H 5216) sponsored by Senate Finance Committee Chairman William J. Conley Jr. (D-Dist. 18, East Providence, Pawtucket) and Rep. Joseph J. Solomon Jr. (D-Dist. 22, Warwick).
Legislators included legislation (2019-S-803Aaa) sponsored by Senate President Ruggerio to establish a process for creating Special Economic Development Districts on state-owned tracts of 20 or more contiguous acres at their inception that are not owned or controlled by the Department of Environmental Management. The measure was triggered by delays and impediments imposed upon the Hope Point Tower apartments proposal for the I-195 Redevelopment District. The special districts will be vested with authority to adopt development plans that include land use, location of buildings, street systems, dimension and height requirements, parking, landscaping, design review and population density. Additionally, the Assembly allowed up to $25 million in tax credits instead of $15 million for the apartment tower, and excluded it from the total spending cap in the Rebuild RI program.
The budget fully funds the state’s education aid formula, increasing direct aid by $33.4 million over the current year’s amount. Legislators granted the governor’s request to add $2.3 million to bring support for English language learners to $5 million, and much of her request to expand pre-kindergarten classrooms, adding $2.9 million, which will add hundreds of seats to the 1,080 that were previously funded, with expansion targeted toward the neediest families. All told, $14.9 million in general revenues will go toward high-quality pre-K.
Legislators also added an additional $640,000 in funding for the Department of Education to help with education reforms.
While the Assembly did not concur with the governor’s proposal to expand the Rhode Island Promise program, it did fully fund the program as it stands, providing graduating high schoolers with two free years at the Community College of Rhode Island.
The General Assembly added to the budget the proposal to establish a 17-member board of directors for the University of Rhode Island, providing it a governance structure similar to those of other public universities. URI is currently under the auspices of the state Council on Postsecondary Education, which also oversees Rhode Island College and CCRI. The change was proposed in separate legislation (2019-H 6180, 2019-S 0942) introduced by Speaker Mattiello and Sen. V. Susan Sosnowski (D-Dist. 37, South Kingstown, New Shoreham).
Also included for URI were authorization for revenue bonds for construction, including $51.5 million for the renovation and expansion of Memorial Union and $26.9 million for a new combined health and counseling center.
Lawmakers declined to implement the proposed hospital rate freeze and further increased rates by 4.5 percent, partially offset by increased revenues from the hospital license fee. The Assembly kept the governor’s proposal for a 1-percent rate increase to nursing home facilities, which increases funding by $3.1 million. It added $9.5 million to provide a wage increase, starting Oct. 1, 2019, to direct support professionals who work with adults with developmental disabilities, raising the hourly rate to approximately $13.
The Assembly also added the Opioid Stewardship Act (2019-S 0798A, 2019-H 6189), sponsored by Senate President Ruggerio and Speaker Mattiello, which assesses a $5 million yearly fee to manufacturers and distributors of opioid products sold and distributed in Rhode Island, except for those used for hospice care, addiction, treatment, epidurals, and intra-company transfers, to fund opioid treatment, prevention and education programs.
Legislators restored cuts to municipal aid, rejecting the governor’s cuts to both the excise tax phase-out and the payment in lieu of taxes program (PILOT) that reimburses municipalities for some of the taxes they lose out on from untaxed nonprofits in their community. Those changes restored $21.5 million in municipal aid.
The budget does not include the governor’s proposal to legalize recreational marijuana, although legislators did include authorization for six more compassion centers, in addition to the three existing ones, to sell medical marijuana. As part of the expansion, the Assembly increased the licensing fees for these centers to $500,000 each. It rejected the governor’s new restrictions on homegrown medical marijuana.
Lawmakers also eliminated a sunset provision on a program that provides fare-free bus passes to low-income seniors and elderly Rhode Islanders, making the program permanent.
The General Assembly added $220,000 in funding for Emergency Medical Dispatch Training to E911 operators to properly determine the nature and priority of the call, dispatch response and give the caller instructions while they await emergency responders, and established a new restricted receipt account for the E911 surcharge on phone bills. To comply with federal requirements, the surcharges on phone bills will be split into two separate charges, one to support E911 operations and another for funding other public safety needs.
Lawmakers did not include funding for renovations to the “Super Max” prison facility. They did include $200,000 to help fund the Nonviolence Institute to fund street workers, nonviolence community training and other initiatives to prevent violence.
They also increased “complete count” funding related to the upcoming census, from $150,000 in the governor’s proposal to $500,000.
The Assembly added approval of up to $200 million in GARVEE bonds that will allow Rhode Island to take advantage of current low interest rates to fund the reconstruction of the viaduct that carries Route 95 north through downtown Providence. Grant Anticipation Revenue Vehicle (GARVEE) bonds are a common funding In May, the Senate approved separate legislation (2019-S 0633A) sponsored by Senate Majority Whip Maryellen Goodwin (D-Dist. 1, Providence) to authorize the same bonds. House Majority Whip John G. Edwards (D-Dist. 70, Tiverton, Portsmouth) sponsored the bill (2019-H 5883) in the House.
The budget authorizes the Rhode Island Turnpike and Bridge Authority to issue up to $50 million in revenue bonds to finance renovations and repairs to the bridges in its purview: Mount Hope, Jamestown Verrazzano, Newport Pell and the Sakonnet River Bridge.
Lawmakers did not concur with the governor’s plan to once again put off the reissuance of license plates, which is required by law. The budget requires that the state start replacing current license plates with a new design upon the renewal of registration, with a fee of $8 per vehicle, a $2 increase.
They reduced from $10 million to $5 million in savings the state must identify in unspecified efficiencies over the course of the year. The Assembly also added statutes requiring more transparent reporting of overspending by state agencies and expanded the auditor general’s authority. It also achieved savings by eliminating vacant positions throughout state government.
The General Assembly did not include a proposal to increase the minimum wage from $10.50 to $11.10 next year. The General Assembly has increased the minimum wage in six of the last seven years.
For more information, contact:
Larry Berman, Communications Director for the Office of the Speaker
State House Room 331A
Providence, RI 02903