Governor Gina Raimondo said the increase of more than $140 million in state revenue identified during last Friday's revenue estimating conference should be used "to invest in economic growth and putting people to work." The governor also appears to have joined with House Speaker Nicholas Mattiello in supporting the elimination of the Taylor Swift tax.
Raimondo called the better than expected revenue "very positive news." Had the revenue estimates been in place when she submitted her budget in March, the governor said she would have used some of the money for additional funding for tax credits and invested in infrastructure, through programs like the School Building Authority and the Infrastructure Bank.
In terms of added investments, Raimondo said in a statement, she would have expanded "the Earned Income Tax [Credit] even more broadly than I called for in my budget proposal in order to reward hard work and put more money in working people's pockets." The governor said she also would have boosted efforts meant to challenge Rhode Island's brain drain by increasing last-dollar scholarships and loan forgiveness.
Had the better revenues been available earlier, Raimondo said she would have reduced the $22 million she sought in personnel savings, and omitted or reduced the effort to raise about $12 million in revenue through a new tax on vacation homes worth at least $1 million.
With that stance, Raimondo may have joined House Speaker Nicholas Mattiello, who last month indicated his desire to see the Taylor Swift tax removed from the budget.
With the Raimondo administration targeting cuts in Medicaid spending, the heightened revenue could lead groups opposing the cuts to ramp up their arguments. The governor faced the possibility in her statement.
"We need to remain focused on investing in the future," Raimondo said. "This revised forecast should not distract us from the necessary work of addressing our long term structural deficit -- especially since so much of this additional revenue is 'one-time,' and therefore not expected to recur in future years. Medicaid accounts for more than 30 cents of every state taxpayer dollar, so we need to stay focused on reinventing Medicaid, on shifting to paying for value instead of for volume, and on achieving savings this year."
Speaker Mattiello called the better than expected revenues "an indication of the renewed sense of optimism in the state and the positive momentum for economic growth as a result of the bold, pro-business budget we passed last year. In finalizing the new budget in the weeks ahead, we will continue on a path that promotes economic opportunities and makes us a more attractive state to do business."
Beyond eliminating the Taylor Swift tax and broadening the elimination of state taxes on Social Security benefits, Mattiello said he intends to restore Raimondo's proposal cuts of payment in lieu of taxes.
"These are critical dollars for Providence, my home city of Cranston, and several other communities that do not receive taxes for property exempted by state law," Mattiello said. "I will consider increasing PILOT funding beyond this year’s level, but at a minimum I intend to restore the $5 million that the governor proposed to cut in next year’s budget.”
Senate President Teresa Paiva Weed suggested these five initiatives following Friday's revenue estimating conference:
- The $500 minimum corporate tax. Proposals to exempt new companies for the first three years, or for those with limited earnings, should be considered.
- Local property tax relief. Restore funding to the state Payment in Lieu of Taxes (PILOT) program to help avoid local property tax increases.
- Medicaid transition. Adequately fund the transition to new Medicaid models of care, supporting community-based investments to meet the Senate’s goal of improved services while restructuring for a sustainable budget.
- Invest in education. Education and worker training is the top priority for the Senate. This is the most critical investment we can make. It lies at the heart of health and prosperity for individuals, families, and the state. It must include adequate and smart funding for school building construction and repairs, child care, and other investments in children and the future.
- Transportation Infrastructure. Increased state funds should be used to match federal funding. More projects can move forward to improve the state’s roads and bridges and to maintain them. It helps to avoid additional debt if the state uses these funds to advance needed upgrades.
“Rhode Island’s economy is gaining momentum,” Paiva Weed said. “The increased resources should be invested wisely in ways that will fuel continued economic growth now and in the long term. The Senate stands firm in its commitment to making the state more competitive for business growth and investing in quality education, workers, and infrastructure.”