Dems drop meals tax, add school funding

WPRI 12

Updated: Jun 1, 2012 10:04 AM

PROVIDENCE, R.I. (WPRI) - Legislative leaders unveiled a state budget proposal late Thursday night that would send $33 million more to school districts and raise some taxes, but would not increase the restaurant tax as proposed by Governor Chafee.

The House Finance Committee voted 15-1 Thursday night to approve the budget proposal, with the lone dissenting vote cast by state Rep. Daniel P. Reilly, R-Portsmouth. The budget is expected to be debated by the full House next Thursday, which would then send it to the Senate and, from there, on to the governor.

Democratic lawmakers' proposed budget would spend $8.1 billion in the 2012-13 fiscal year that starts July 1; roughly $200 million more than Chafee suggested, though many of his proposals from February were retained. They would use an infusion of cash from Powerball winners and other sources to help close a projected deficit.

Interactive: See Chafee's budget proposal

The budget would fully fund the state's new school funding formula and provide an additional $11 million to schools on top of that, as the governor proposed.

Lawmakers also propose restoring $9.6 million in funding for the developmentally disabled and spending $2.6 million to boost Central Falls retirees' pensions after they were slashed in bankruptcy. The budget would continue to provide low-income adults with dental care as part of the state's Medicaid program.

Democrats' proposal scraps a rise in the meals and beverage tax from 8% to 10% that the governor proposed. The lodging tax will not be applied to vacation home rentals and bed-and-breakfasts with fewer than three rooms. Tolls would be allowed on the Sakonnet River Bridge in the East Bay. The Jamestown Verrazzano Bridge would also be transferred to the state's tolling authority.

Reilly blasted the toll proposal after voting no. "It's an extremely unfair tax burden on Aquidneck Island residents," he said, arguing it will force people in those communities to bear the costs of maintenance on bridges.

The state's 7% sales tax would be extended on Oct. 1 to cover clothing and footwear that costs $250 or more, as well as car washes, taxis, limousines and pet services other than veterinarians. The cigarette tax would increase by another 4 cents to $3.50 a pack. A tax amnesty program would happen this fall.

The income tax would not be increased on Rhode Islanders who earn more than $250,000 despite a major push by unions and liberal lawmakers to raise their rates. George Nee, president of the Rhode Island AFL-CIO, said he was pleased about some of the human services funding and the fact it didn't change local collective bargaining.

"Hopefully it's the start of an economic recovery," Nee said. "The signs have been kind of good at the end [of the fiscal year], and maybe we can start getting out of the economic doldrums and go back to providing critical services."

Voters will be asked to approve about $209 million in borrowing on the November ballot, including a $94 million veterans home plus money for clean water, affordable housing, recreational and environmental projects and upgrades at Rhode Island College. A proposed state nursing school in Providence's Jewelry District did not make the cut.

Few parts of the governor's proposed changes to help cash-strapped cities and towns made it into lawmakers' budget proposal, though they would change the way school budgets are calculated year-over-year and alter the timing of payments from the state to municipalities. Locally run pension plans would not be touched.

Lawmakers would change the state's film and TV tax credit program to tighten regulations and move oversight to the R.I. Department of Administration, bowing to a proposal the governor put forward after the implosion of Curt Schilling's video game company, 38 Studios. Musical and theatrical productions would be eligible for the credit.

Lawmakers would make a $3.2 million supplemental contribution to the state pension fund that Governor Chafee proposed scrapping in the wake of last year's overhaul but Treasurer Gina Raimondo said should be made anyway. A new Office of Management and Budget would be created to add new oversight functions.

DMV fees would not be increased in January, as the governor proposed, and the Rhode Island Capital Plan Fund would be used to avoid borrowing for the transportation budget. Rhode Island PBS would keep state funding for a longer period of time rather than lose taxpayer backing in January, with an eye on cutting off funding later.

The Office of Higher Education would not be merged with the Rhode Island Higher Education Assistance Authority, as proposed by Chafee. However, lawmakers want to merge the two boards that oversee K-12 and higher education and create a new position, chancellor of education, to oversee all levels of schooling.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi

Copyright 2013 WPRI 12. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Political Pulse

We welcome your thoughtful comments. Be the first to participate in the discussion. All comments will display your username and avatar.