The Agenda

The fiscal 2009 budget has now been approved by the General Assembly, and everyone expects the Governor to sign it. Here are a dozen things worth knowing about.

1. The official word is that there were no changes to any taxes. But what this means is that the tax on bottled water the Governor and legislature enacted in May, will stand. his also means that taxpayers earning more than around $250,000 will get their cut on schedule and pay a few thousand dollars less in income tax than they did last year. It also means that raising the tax on health insurer premiums and expanding it to cover dental insurance apparently doesn’t count. he last such change in this tax was promptly passed on to you, though, so this one probably will be too.


2. All traffic fines will increase. An offense that cost you $75 will now be $85. Minimum court costs are going up, too.


3. The only bond issue to be on the fall ballot is a transportation bond: $80 million to make the fiscal train wreck of the Department of Transportation much worse, and also $7 million for public transit. he agricultural open space bond and other DEM priorities were not deemed important enough, so you won’t get to vote on them.


4. But that’s not the only borrowing. The state intends to borrow (without a referendum) almost $350 million to buy back already-issued historic tax credits—at full price. his will cost us about $47 million for the next nine years. Of that $47 million, a bit more than $9 million a year will not go to restoration or the wages of construction workers, but to lower the taxes of whoever bought the credits. For perspective, this is just a little bit less than the state collects from taxes on alcohol each year. So if you buy a ten-dollar bottle of wine, about sixty cents of its sales tax will go to lower someone else’s tax bill.


5. There are several cuts to Medicaid, though some were not quite as bad as the Governor had proposed. (Medicare drug share payments, however, are slated to increase slightly.) The state remains essentially without a plan to realize the savings they claim in shifting long-term care patients to home care, though, so these savings likely won’t happen. Quite a number of the poor people and immigrant children who are cut off will wind up getting care from emergency rooms, so these savings probably won’t materialize either.


6. You’ll be happy to know that escalating costs due to the escalating caseload at DCYF have been addressed. That is, DCYF is to be empowered to help only 1,000 kids who need foster placements or similar services. If you happen to be kid number 1,001, you are officially out of luck. his, of course, is likely unenforceable, and could possibly put the state at some legal risk, making those savings unlikely to be realized, too.


7. Administration of the crime victim’s compensation fund will take a 10% chunk out of that fund, so if you are due some money from the fund, you’ll get 10% less than you might have had you been beaten up this year instead of next.


8. The reimbursement rates for child care are going up, slightly. Last year, they were pinned at 75% of the going rate for child care in 2002. (Seriously.) This year, the rate will be 75% of the average of the 2002 rate and the 2004 rate. (No joke, it really says that.)


9. The budget changes law to allow “Mayoral Academies”. These are charter schools, championed by Cumberland Mayor Daniel McKee, and exempted from any requirement about teacher pay, benefits or pensions. Proponents say they won’t deprive the regular schools of money, but the claim is only convincing to people with short memories. In 2004, Governor Carcieri took $7.9 million from the state’s public schools and gave it to the charter schools, and subsequent budgets have been only slightly less obvious. The record is pretty clear on the point: new charter schools will mean less money for existing public schools. Period.


10. Municipal aid will remain unchanged from this year (which, you will remember, was cut $12.5 million in May). To make this a little more palatable, the state is promising “up to” $14.1 million in new education funds to be split among the cities and towns. (For technical reasons, it also takes back a little aid from a few towns, leaving the difference at $12.8 million.)


11. Those cities and towns will doubtless be glad to hear about the establishment of a new “Advisory Council on Municipal Finance”.


12. There is barely a hand’s width of distance between the Governor and the House leadership. The budget reads like the Governor’s second draft. There are some important modifications here and there, but the basic thrust of his intent is intact—the budget is balanced by spending cuts that affect the poor and middle and tax cuts that affect the people at the top of the income heap.

But really, the bottom line of this budget is that it’s not even going to meet its own goals. False savings claimed today will give us a shortfall come November, and we’ll have to cut more next spring. Meanwhile, wealthy people get their taxes cut, everyone’s property taxes will go up (five towns have requested and received waivers of the state limits on property tax increases) and some of the biggest cost drivers—DOT borrowing and health insurance, to name two—remain completely unaddressed.

[This article originally ran 20 June in Rhode Island Policy Reporter. Read this and other articles on how public policy affects life in the Ocean State here.]

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