Gov. Gina Raimondo’s administration unveiled a $9.38 billion budget that would finance $250 million in public school reparations and allocate $3 million to growing the state’s small businesses, while relying upon sports betting — should it be legalized by the Supreme Court this year — to bring in $23.5 million of new revenue.
Much of the state’s numbers depend on outcomes in Washington, such as whether or not the Children’s Health Insurance Program will be reauthorized.
“This is a difficult budget environment,” said Michael DiBiase, the director of the Department of Administration who managed Raimondo’s proposal. “We have a lot of uncertainty in Washington.”
New sources of revenue also include increased compassion centers (sites where patients with qualifying conditions can obtain medical marijuana), new co-pay fees on non-disabled adult Medicaid enrollees and a cloud-based software tax, which would tax software like Microsoft Office 365. These sources will be needed to fund large new expenditures, such as the $6.4 million going to the RI Promise campaign and paying back cities and towns as the state phases out the car tax, on top of the projected $260 million deficit.
Raimondo’s budget does not propose broad-based tax increases. Raimondo’s introduction to the budget expressed optimism for the state, which is at its lowest unemployment rate since March 2001 at 4.3 percent. But Rhode Island has posted job losses in four out of the last five months.
As state and local officials come to understand how federal tax reform will affect them, many have voiced concerns that their budgets could suffer, despite President Trump and many lawmakers’ promises that it would instead bolster state finances.
Some budget analysts, like the right-leaning Tax Foundation, argue that the new tax law broadens taxable items at both the state and federal level and brings in potential new revenue for the state by eliminating certain deductions. But Rhode Island state tax officials have said that because they rely less on the federal personal tax income, they do not expect to see these gains.
This month the R.I. House of Representatives will open itself for hearings before they pass a revised version, likely this summer.
Education
In addition to the updates on public school facilities, Raimondo’s other proposed ballot measures include $25 million to improve the University of Rhode Island campus at Narragansett Bay, $25 million for renovations at Rhode Island College, and a $48.5 million green economy and clean water fund that would protect the state’s waters and remediate industrial sites for redevelopment.
Between FY15 and FY19, the budget for commerce, the Department of Business Regulation, higher education and elementary and secondary education has grown by nearly 4 percent, or around $270 million.
The FY19 budget also proposes $1.1 million toward expanding pre-kindergarten programs and $1.5 million for infant and toddler childcare.
Medicaid changes
Raimondo’s plan would charge Medicaid enrollees new co-payments between $2 and $8 on services that tend to be overused, said Patrick Tigue, Medicaid program director for the Office of Health and Human Services. Non-disabled adult enrollees would pay a co-pay of $8 on non-emergency emergency room visits, $3 for non-preventative physician visits, $4 for name brand prescription drugs, $2.50 for generics and $3 for inpatient hospitalizations.
While people with disabilities and elderly people make up only 20 percent of Medicaid enrollees, they account for 59 percent of the state’s expenditures, according to a study by the Kaiser Family Foundation. The new budget proposal targets adults without disabilities; still, Eric Beane, secretary of the Office of Health and Human Services, said the new fees would add up to $3.2 million in new revenue.
The changes would bring Rhode Island in line with 24 other states, including Massachusetts, that have instated these types of co-payments, Beane added.
Rhode Islanders in need
The plan would use $1.7 million from the state’s general fund to extend the care of Department of Children, Youth and Families for foster children aged 18-21 that decide to opt back into its services. The state would also increase the rates paid to foster families by adding $1.3 million to its budget, bringing those rates on par with Massachusetts.
The budget also makes provisions to address the state’s opioid crisis, which caused 233 overdose deaths between January and September 2017. The budget outlines a new “Behavioral Health Link” resource that would connect those with mental health concerns to treatment resources and keep them out of the justice system. Raimondo also hopes to establish a job-training program for those with substance abuse issues.
Under the proposed budget, the state would add 12 new medical marijuana compassion centers to its current three. Raimondo would also allow patients from Connecticut and Massachusetts to access medical marijuana in Rhode Island, although the former is set to open recreational marijuana shops in July 2018.
Despite the upfront costs of opening the compassion centers, state officials said they expect to see a net revenue by broadening its customer base, as well as by expanding the options to receive a medical marijuana card.
Business
The state would also see new revenue by taxing cloud-based services, such as TurboTax, a service that users pay for through the Internet but do not download onto their computer.
In her budget, Raimondo also set aside $475,000 for a new SupplyRI program, which would connect large buyers with in-state smaller suppliers. The plan would also add $500,000 to the small business loan fund, doubling the number of loans added this year.
