Record $14B state budget heads to McKee’s desk

A record $14.0 billion tax-and-spend plan heads to Gov. Dan McKee’s desk after passing in the Rhode Island Senate on Thursday.

The Senate’s 31-4 vote came after an hour of discussion in which lawmakers lavished praise on investments made in education, housing and other priority areas.

Four of five Republican senators – Jessica De La Cruz, Anthony DeLuca, Elaine Morgan and Gordon Rogers – voted against the budget.

The $14.0 billion spending plan, which sailed through the Rhode Island House of Representatives last week, is 1.4% more than the $13.8 billion proposal Gov. Dan McKee introduced in January, with the increase mostly due to reallocating money left unspent from the fiscal 2023 budget. 

Senate Finance Chairman Lou DiPalma, a Middletown Democrat, praised the budget as “exemplary.”

“I am recommending to you a sound, innovative and compassionate budget which recognizes a fiscal environment of decreasing revenues while still maintaining prudent one-time investments out of our diminishing surplus,” he said.

McKee’s office announced his plans to sign the budget at noon Friday on the South Steps of the State House.

The budget relies heavily on the one-time windfall of federal stimulus aid to offer tax relief, address the housing crisis, and focus resources on underserved and vulnerable students.

Housing programs feature prominently, with a separate budget article enshrining the newly created Rhode Island Department of Housing and giving Housing Secretary Stefan Pryor broad discretion to oversee a tranche of new programs.

The budget preserves the $2.7 million McKee proposed to hire staff for the newly created state Department of Housing. It also incorporates the $29 million package of housing incentives – including a tax credit for developers that build low-income housing projects  – introduced last month by McKee and Housing Secretary Stefan Pryor. This is on top of the $250 million in federal recovery funds the department is already charged with spending on housing and homelessness solutions.

A separate, $10 million set aside added by legislators creates a revolving fund administered by the state housing department to help with “shovel-ready” housing projects.

The much-maligned education funding formula is also getting a facelift, though advocates insisted a more holistic overhaul remains on their to-do lists. The $1 billion earmark in local school aid includes extra funding for multi-language learners and special education, while setting aside $20 million to offset enrollment declines for students who opt to go to charter schools.

“This is not perfect, but it’s going to provide progress,” Sen. Sandra Cano, a Pawtucket Democrat said, emphasizing lawmakers “duty” to serve underfunded and historically underserved students. 

The spending plan includes a $4 million cybersecurity education and workforce training program out of RIC, to be headed by former U.S. Rep. Jim Langevin, plus $10.4 million mostly from stimulus funds, to offer free tuition to in-state, full-time RIC students for their third and fourth years. 

On the tax relief side, lawmakers backed a tax break for small businesses that allows them to bypass paying taxes on up to $50,000 of tangible assets – think office furniture, computers, and kitchen equipment. A four-month suspension on the gas and electricity gross receipts tax tacked on to customers’ monthly bills also won support, though legislators shifted the $35.6 million cost to offer the rebates from the fiscal 2023 budget, as McKee proposed, to fiscal 2024.

Despite protests from retirees and some lawmakers, the budget does not substantially change the freeze on cost-of-living adjustments for retirees resulting from 2011 reforms under then-Treasurer Gina Raimondo. It does distribute what is now a quadrennial payment into smaller, annual chunks while also ordering the Rhode Island Treasurer’s office to study and make recommendations on the 2011 pension reform.

Wait till next year for comprehensive pension reform

Unlike in the House where fiery debate played out over pension reform, the Senate discussion was brief and muted. Sen. Frank Ciccone, a Providence Democrat, called the budget measures a “step in the right direction,” but added that he will call for more holistic reforms next year.

Other elements of the budget include:

• $45 million for life sciences, including designated wet lab space
• $20 million in grants for cities and towns road and sidewalk repairs
• $14 million in state and federal aid for hospitals
• $7 million in early childhood education funding, split into $3 million for Head Start and Early Head Start funding and a $4 million pilot program to give free child care to child care providers who earn less than 300% of the federal poverty limit
• Around $2 million from state settlement funds with Purdue Pharma for the Rhode Island Attorney General to hire 15 new employees

The budget does not set aside funding to address the Rhode Island Public Transit Authority’s looming fiscal cliff. It also strikes McKee’s proposed sales tax cut, and eliminates a $25 million allotment for South Quay marine terminal in East Providence.