Rhode Island taxpayers and businesses, small and large, can breathe a sigh of relief at the budget plan paased by the General Assembly last week. The budget plan, the work of the House Finance Committee, which is probably the most influential on Smith Hill, opted not to go with Governor Chafee’s misguided sales tax proposal, which would have slammed all of us with a host of new sales taxes while burdening businesses further with confusing tax collection and reporting requirements. It’s the right approach and a responsible budget under the challenging circumstances.
The budget spares taxpayers and goes after state spending, which is exactly what many of us have urged them to do. It also goes after the structural deficit, which is largely comprised of state entitlement obligations from year to year, by eliminating automatic longevity pay increases for state workers. Instead of $167 million in new revenue from sales taxes, the budget plan calls for $150 million in spending cuts. There is also anticipated sales tax revenue from a curious, short list of items to be taxed at seven percent (over-the-counter prescriptions, certain insurance fees, sightseeing tours and digital downloads, with the latter being something that has yet to be explained but could end up being a lot of things, considering our near-total reliance on the computer). Cuts and consolidations to state agencies, another way to trim the beast of state government, will supposedly save another $44 million.
Cuts to human services programs like Medicaid will impact those less fortunate and that is troubling. Hospitals and nursing homes also lose funding over previous levels, and that will hurt them too as some of our community hospitals are already struggling. The Neighborhood Opportunities Program (NOP), which provides low cost housing for the poor and homeless will also be cut, which is a shame, considering the fact that we have over 4,000 homeless individuals on any given day in this state. These cuts represent tough choices and are certainly not made without a keen awareness of the pain they will cause to worthy organizations and individuals alike.
Governor Chafee is the biggest loser to emerge in the wake of the House Finance Committee’s wholesale different approach to squaring the current deficit. Although several of his ideas were incorporated, his sales tax plan was not merely rejected by the public, it was repudiated by the committee, which found no merit or justification in such an approach. The items they came up with to tax were not even on the governor’s extensive list! Chafee is just six months into a four-year term and he’s been marginalized already. To regain whatever mojo he can muster going forward, he now needs to get behind Gina Raimondo on pension reform, which is the 800 pound gorilla in the room, and which will deep six any budget plan that emerges at the end of this legislative session if reform doesn’t happen this fall in the special legislative session.
Ending automatic longevity pay increases for state employees and shutting down the unions' attempts to push through binding arbitration for teachers were also noteworthy accomplishments.