Your Cheat Sheet on the State Budget
Stephen Beale, GoLocalProv News Editor
Your Cheat Sheet on the State Budget
No Deficit The House last night did away with the $182 million deficit in the current year and balanced the budget for the upcoming year, eliminating what could have been a $366 million deficit.
No New Taxes? House leaders are quick to point out that they balanced the budget without raising any new broad-based taxes. However, the House did that by cutting about $120 million in local aid to cities and towns. That means one of two things: either higher local taxes or cuts in services. The House leadership wants cities and towns to follow its lead in making their own budget cuts, but the House also passed a measure allowing communities to raise the car tax.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTPension Reform The under-funded public pension system has been an albatross around the neck of taxpayers and lawmakers—one recent study estimated that the unfunded pension obligations were as high as $9.4 billion. Last night, the House took a step toward fixing the problem, ending annual adjustments for inflation, but that only applies to future retirees, not those who are already receiving their pensions. And, the House exempted the first $35,000 of a pension income from the change. That means that someone living on $35,000 or less will see their pension go up as prices and other costs of living increase.
The $100 Million Elephant in the Room Prior to last night, there was a lot of buzz over the fact that the balanced budget assumed Rhode Island would be getting $100 million in federal Medicaid funding, which Congress wants to cut. But last night’s budget has a safety valve. If the $100 million doesn’t come through, the House said the governor could make across-the-board cuts in the state budget to make up the difference.
What Happens Next? The budget goes to the Senate today. If both chambers agree, it will be forwarded to Gov. Don Carcieri. If he vetoes it, it will be kicked back to the House and Senate for a possible override.