Metro

Raimondo introduces first budget as governor

Proposed budget would eliminate $190 million operating deficit, restructure state Medicaid

By
Senior Staff Writer
Friday, March 13, 2015

Gov. Gina Raimondo outlined her budget proposal — stressing the importance of attracting businesses, reforming Medicaid and improving education — in her State of the State address Thursday night. Delivered before a joint session of the General Assembly, the address marks the first budget recommendation of Raimondo’s term, which began in January.

Raimondo made the budget proposal the sole subject of her address,  emphasizing her plans to facilitate statewide economic recovery.

Raimondo proudly said the proposed budget is balanced, noting that she believes it will eliminate the $190 million deficit looming over the state. She said the proposal also aims to reduce the structural deficit, which is projected to reach $400 million by 2019.

The budget proposal must pass both chambers of the General Assembly before becoming law and will undergo revision during that process.

‘Out pops a budget’

Before beginning, Raimondo embraced Senate President Teresa Paiva Weed, D-Newport, and Speaker of the House Nicholas Mattiello, D-Cranston, both of whom she frequently credited with helping to prepare the budget in her address.

Though Raimondo said Feb. 20 during a question-and-answer session, “For too long, what’s happened in Rhode Island — and it may happen in other State Houses — is the governor proposes a budget and then the General Assembly takes the budget and often in the dark of night, in a quiet room, the lobbyists and the General Assembly get together and they hack it up every which way and out pops a budget,” the Providence Journal reported.

When Raimondo met with Mattiello to apologize for her comments, Mattiello said he would not expect “placeholders” for unspecified cuts in Medicaid in the budget proposal.

A tough job

Raimondo expressed concern over Rhode Island’s widespread unemployment and failure to create high-paying jobs. “Our biggest problem is that our economic engine is out of gas,” she said.

Raimondo said the state should support residents who work long hours for low wages, adding that its current minimum wage is too low to support many workers. “No one who works full-time should raise a family in poverty,” she said to applause.

She reiterated her desire to raise the state minimum wage from $9 per hour to $10.10, adding that the budget will increase the state’s earned income tax credit by 5 percentage points, to 15 percent, over two years.

The budget also proposes eliminating taxation on social security benefits — a change Mattiello has championed for several months.

Raimondo said the proposed budget would incentivize the development of high-paying industries in the state. The proposal looks to eliminate the energy sales tax  over the course of five years and to establish an “anchor tax credit” to reward businesses that employ large numbers of Rhode Islanders. It also proposes creating a tax credit to incentivize Rhode Island-based businesses to create new jobs.

Pay it forward

The proposal also includes plans to reorganize aspects of the state government, including a merger between the Rhode Island Higher Education Assistance Authority and the Office of the Postsecondary Commissioner, as well as what Raimondo has described as a “reinvention” of Medicaid within the state. The proposed Medicaid reform strives to eliminate inefficiencies in the system and to target fraud.

In an executive order, Raimondo created a working group that will propose Medicaid reforms to the Executive Offices of Health and Human Services by April 30. Raimondo estimated that these combined efforts will save $90 million in state expenditures on Medicaid.

Raimondo proposed a unified tourism brand for the state and a tax on second homes valued at $1 million or more. She also recommended taking advantage of “historically low interest rates” to restructure some existing state debt and closing “a tax loophole on certain real estate transactions.”

Raimondo added that she would also take a 5 percent pay cut for the year.

Getting schooled

Raimondo outlined several objectives targeted at the state’s education system, including the establishment of a state School Building Authority to oversee and improve school infrastructure. She also proposed “Prepare RI,” an initiative that would enable high-performing high school students to take college classes at no cost to them.

She also recommended creating a $10 million “last-dollar scholarship” program to enable low-income students with impressive academic performance to attend college. This program would be financed by restructuring the existing grant program, as well as by the RIHEAA and OPSC merger, she said. “Let’s give these kids a chance, and let’s get this done,” she added to applause.

A positive reception

General Treasurer Seth Magaziner ’06 told The Herald that even though it was challenging to consider the interests of various state agencies, the government’s financial predicament and the state’s political climate, the response has been positive.

“We’re going to be able to do tens of millions of dollars of projects that will put people and the construction trades back to work, and we’re doing it with the vast majority of the funding coming from private sources or the federal government,” he said, adding that the state will benefit from $30-40 million worth of projects while investing only $2 million of its own money.

Providence Mayor Jorge Elorza said he appreciated the effort Raimondo has made to incorporate municipal leaders across the state in fiscal planning, adding, “What you see in the budget reflects that she heard a lot of our concerns.”

“We’re concerned about creating jobs and about investing in infrastructure in our schools, and this is a budget that’s good for both of those things,” Elorza said.