Winners and Losers in McKee’s Budget Proposal
Thursday, January 19, 2023
Governor Dan McKee on Thursday submitted his FY24 $13.7 billion budget to the General Assembly.
Mckee's office claims his budget proposal "focuses on maintaining a trend of fiscal responsibility with no broad-based tax increases, while proposing a nearly $100 million tax relief plan, critical investments in K-12 education to support improving student outcomes, and key investments to strengthen Rhode Island’s economy and increase access to good-paying jobs."
In a letter to Rhode Islanders that opens the budget document, the Governor writes: “My Fiscal Year 2024 budget proposal is aimed at making further progress toward our RI 2030 goals. There are three goals in particular that remain at the top of my mind: raising incomes for all Rhode Islanders, improving educational outcomes that meet Massachusetts levels by 2030; and creating a healthier state where we reduce chronic illness and improve health outcomes.”
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Abortion Funding
McKee’s office said in a statement, “Today, Governor Dan McKee transmitted his FY24 budget proposal to the General Assembly. At his direction, the budget includes proposals to provide insurance coverage for abortion-related services for state employees and individuals enrolled in Medicaid. This will help ensure that vital healthcare services are accessible to those who need them. We thank the General Assembly members who have introduced standalone legislation to address this crucial issue. Governor McKee reaffirms his commitment to signing the Equality in Abortion Coverage Act legislation as soon as it reaches his desk.”
McKee’s announcement sparked immediate praise from Campaign for Equal Abortion Coverage. The group said, "Earlier today, Governor Dan McKee introduced his proposed budget for 2024. We are thrilled that he included health coverage for abortion for state employees and people who use Medicaid. This is such an exciting move forward after years of advocacy."
"For too long, access to abortion services have been restricted based on the type of health insurance people use. Our campaign partners and countless Rhode Islanders fought hard to protect the right to an abortion in our state, and in these post-Roe days, that is something to be proud of. By making strides to ensure that services are affordable, the Governor and his Administration are showing real leadership on this issue. People should not be denied the ability to make decisions about their healthcare simply because they use a public health program to afford health services," the Campaign added.
Key elements of the Governor’s FY24 “RI Ready” budget include:
Tax Relief
Reducing the state sales tax: Incrementally reducing the state’s sales tax starting this year with a reduction from 7 percent to 6.85 percent resulting in a total savings of $35 million annually. The State’s sales tax was increased during the banking crisis of the 1990s with a promise that it would be later reduced – that promise was never kept.
Rhode Island remains the highest sales tax in New England even after McKee's proposed reduction.
Reducing the corporate minimum tax: Lowering the corporate minimum tax from $400 to $375. This tax most negatively impacts Rhode Island’s smallest businesses.
Stopping the gas tax increase: Providing relief at the gas pump by stopping the scheduled 3-cent increase on the gas tax that is required by law to go into effect on July 1. This proposal will provide nearly $25 million in tax relief over the next two years.
Delivering energy bill rebates: Providing Rhode Islanders with a rebate for the 4 percent gross receipts tax on their electric bills and 3 percent gross receipts tax on their natural gas bills. This will result in $35 million in total relief.
Eliminating the litter tax for businesses: Ending the litter tax which is paid by local businesses. Under the current structure, the nearly $1 million collected from this tax are not directed to support litter or environmental initiatives. In its place, the Governor is proposing targeted funding for the Keep Rhody Litter Free initiative.
Workers Comp: Directing more than $4 million into the Workers Compensation Fund to prevent an increase in the premiums paid by Rhode Island businesses.
Truck trade-in: Exempting from the sales and use tax the trade-in value of trucks with a gross weight of 14,000 pounds or less to mirror exemptions for passenger cars and motorcycles. The exemption for trucks is projected to save individuals about $3.7 million next fiscal year.
Education
Invests $7 million to preserve 800 Pre-K seats funded by an expiring federal grant and $1.3 million to prepare 35 new classrooms for the 2024-2025 school year.
An increase in year over year in K-12 education funding by $57.8 million which includes fully funding the multilingual learner categorical and the special education categorical.
Provides $2.5 million to the Community College of Rhode Island in one-time funding for the Fresh Start Scholarship that will work to re-enroll 1,000 students who left the college before completing a degree. The funds will provide tuition and fees for one semester, after which students then become eligible for federal financial aid.
Provides support to the RI Reconnect program in the Office of the Postsecondary Commissioner (OPC), using $8 million to improve postsecondary degree and credential attainment among underserved, working-age Rhode Islanders. OPC staff will work with students to address barriers to education and workforce training completion, particularly among communities of color and in Qualified Census Tracks to enhance the economic stability of working-age Rhode Islanders.
All three higher ed institutions receive major increases.
Commerce
Adds $2.6 million to the Small Business Assistance Program which connects businesses struggling to obtain lines of credit with community-based lenders.
Expands the Wavemaker Fellowship student loan forgiveness program to include teachers.
Makes a $45 million investment into the life sciences sector which includes the development of wet lab incubator spaces.
Invests $25 million to support offshore wind growth through Phase 2 of the South Quay Marine Terminal Project in East Providence.
Provides $5 million for Small Business Assistance in energy efficiency investments.
Housing
Hundreds of millions of housing dollars are left unspent. On Wednesday, McKee named Stefan Pryor as Rhode Island's new Housing Secretary.
The budget "builds a robust Housing Agency to support the implementation of last year’s historic $250 million investment to create more housing across Rhode Island by proposing an additional 21 FTEs for the newly created Department of Housing."
Adds $30 million to expand shelter capacity to better meet the needs of individuals experiencing homelessness.
Health
Expands the Reproductive Privacy Act of 2019 to individuals enrolled in Medicaid and state employees covered by the state Employee Health Insurance Plan.
Invests $7.5 million for reimbursement rates for the provision of care at Certified Community Behavioral Health Clinics that are coming online in FY24.
Provides an additional $1.6 to operate the 9-8-8 hotline.
Climate, Energy, and Clean Water
Transfers $28.5 million in surplus funds to the Rhode Island Infrastructure Bank to satisfy the state match for the Clean/Drinking Water State Revolving Funds through Fiscal Year 2028.
Proposes directing $4.5 million to the Executive Climate Change Coordinating Council (EC4) beginning in January 2024 and a total of $31.5 million over seven years to the EC4 to implement the Act on Climate efforts.
Eliminates the utility shareholder incentive for administering the State Energy Efficiency Programs.
Extends the State Energy Efficiency Program and the Renewable Energy Fund through the end of 2030; requires the Office of Energy Resources to issue a Request for Proposal for a potential administrator of the State Energy Efficiency Programs between 2025-2030.
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