Horowitz: Raimondo's Budget: Well-Constructed and Well-Packaged
Rob Horowitz, GoLocalProv MINDSETTER™
Horowitz: Raimondo's Budget: Well-Constructed and Well-Packaged
Coupled with strong forward-looking substance was a well-orchestrated presentation. And the presentation did not begin with last week’s televised Budget Address. The new Administration did an excellent job of setting the public relations and political foundation for the budget to be well-received in the weeks leading up to its release. Through a series of effective media efforts, Raimondo previewed some of the highlights including her approach to tax incentives and tourism and the fact she was going to work to rein in Medicaid spending as well as the reasons for these initiatives beforehand. She also paved the way for a friendlier reception in the General Assembly by incorporating top priorities of the legislative leaders, including exempting social security income from the state income tax for lower and middle income seniors, which is an adaptation of a more expansive proposal by the Speaker, and more funding for education, which is favored by the Senate President.
In the Budget Address itself, Governor Raimondo continued to build the case for the actions she is proposing, through starkly and crisply defining the problem. “Our biggest problem is that our state's economic engine is out of gas - we've lost 80K manufacturing jobs in the last few decades and we haven't positioned ourselves for job-creation in advanced industries with higher growth and higher wage jobs. The jobs we are creating are low wage and, as a result, our per capita income is about $47K a year compared to $57K in Massachusetts and $60K in Connecticut. We remain among the last states in the nation in employment and in job growth, and we are one of the oldest states in America because our young people are fleeing to find work elsewhere.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTGovernor Raimondo is also receiving a big assist from the now robust national economic recovery. The new revenues that are coming in as a result of a pick-up in jobs and business growth have already eased some of the more difficult budget choices and created room for new spending. An improving economy is likely to positively impact the Governor’s approval ratings, giving her more leverage with the General Assembly. Popular governors can effectively use the bully pulpit to advance their proposals.
Well-constructed and well-packaged, the Raimondo budget puts Rhode Island on the right road. Governor Raimondo is off to an impressive start.
Rob Horowitz is a strategic and communications consultant who provides general consulting, public relations, direct mail services and polling for national and state issue organizations, various non-profits and elected officials and candidates. He is an Adjunct Professor of Political Science at the University of Rhode Island.
Raimondo's Budget - Winners and Losers
Winner
Lower-Income Senior Citizens
Acknowledging one of Speaker Mattiello's top priorities for the legislative session -- cutting taxes on social security benefits -- Raimondo's budget proposal exempts Social Security benefits from state personal income tax for single filers with Federal Adjusted Gross Income less than $50,000 and for married filers with Federal AGI less than $60,000. "This proposal would place Rhode Island on an equal footing with Connecticut," said Raimondo's office -- adding that the proposal is "estimated to reduce the final payments component of personal income tax by $3.9 million in FY 2016."
Photo: Neil Moralee/Flickr
Loser
Million Dollar Second Home Owners
Says Raimondo, "revenue options were specifically chosen to minimize impact on working Rhode Islanders." The Governor proposed establishing a statewide property tax for non-owner occupied residences (i.e., vacation homes, second residences) and vacant residential land valued at greater than $1.0 million. This effort would provide $11.8 million through a "relatively small number of wealthy taxpayers," said Raimondo. And some disagreed with the approach. "Her proposal for increasing taxes, whether on health insurance plans, on a new, statewide property tax on second homes valued at over a million dollars, on cigarettes or on anything else, is a complete non-starter," said Monique Chartier with RI Taxpayer. "Rhode Island has a spending problem, not a revenue problem, as evidenced by some of the highest taxes in the country and it is surprising that the governor, with her financial background, does not recognize this."
Image: Andrew_Writer/Flickr
Winner
Construction Workers
The Governor’s budget includes an additional $20.0 million from state debt refinancing proceeds to create a capital fund to help address school facility needs -- and establishes a School Building Authority within RIDE to oversee distribution of school modernization funds, targeting facilities in greatest need. Lifting the school construction moratorium, the budget proposal sets the annual construction aid appropriation at $80.0 million starting in FY 2017. According to Raimondo, this will "create fiscal stability with predictable funding and allows for projects to be prioritized." In addition, a non-school package of real estate tax incentives is intended to "encourage construction of job-producing projects, with a focus on development near transit hubs and historic structures."
Photo: Alan Kotok/Flickr
Loser
Smokers
The Governor’s budget proposed a number of additional revenues, including increasing the state’s cigarette excise tax by $0.25 per pack, from $3.50 to $3.75 per pack. "This increase will raise $7.1 million in FY 2016 while discouraging smoking and improving health outcomes," said Raimondo. According to the Tax Foundation, Rhode Island had the third highest cigarette tax in the country in 2014.
Winner
Open Government
Raimondo touted launching the state's first web-based budget tool - and good-government watchdogs Common Cause weighed in on the development. Said Executive Director John Marion,"The state budget is the most important document produced by our government every year and until now that document has been trapped inside clunky PDF documents. With the new interactive budget Rhode Island now has a tool that makes those hundreds of pages much more accessible. Two key features stand out; the ability to look at how individual line items have grown or shrunk going back until 2008, and the ability to look at how the Governor's budget stands up to what the General Assembly eventually enacts. That second feature, if updated in real time, will empower citizens and journalists to much more easily follow the General Assembly's budget deliberations than they have been able to in the past. By extension that means we can more easily hold both the Governor and the legislature accountable for the hundreds of decisions made in the budget. Finally, by freeing the budget from PDFs, and providing the raw file for download, the democratization of data has reached Rhode Island's shores. Now anyone who is interested can build their own tool to analyze the choices reflected in the state budget.
Loser
AirBnB
The Governor's budget proposal recommends requiring providers of unlicensed rentals of lodging accommodations, such as Airbnb, to be subject to all state lodging taxes. According to Raimondo's office, this proposal is anticipated to enhance sales and use tax revenues by $851,512 in FY 2016.
Winner
Tourism Industry
The Governor’s budget modifies the distribution of lodging tax dollars to provide a greater share to statewide tourism efforts to support a major state tourism marketing campaign -- but it comes at a cost. "To provide sufficient resources for this initiative, the Governor’s budget establishes new revenue sources dedicated to tourism promotion. The budget proposes expanding sales and lodging taxes to online resellers of lodging accommodations, who currently pay no taxes on their markup over the wholesale prices. The budget also closes an existing loophole that exempts vacation houses and small bed and breakfasts from paying the sales and lodging taxes. Finally, the budget would apply sales and local lodging taxes to unlicensed rentals, which have increasingly become an alternative to hotels, bed and breakfasts and other licensed lodging. Further, the Governor proposes redirecting a greater portion of the state hotel tax to dedicate more funds to statewide tourism, marketing, and economic development at the Commerce Corporation. The net effect of changes to the tourism funding formula and new revenue sources is an additional $6.4 million annually."
Loser
State Workers
The Governor’s budget proposes achieving savings of $22.0 million related to personnel and employee benefits. "Administration officials will work with state employees and their representatives to find the savings while avoiding significant layoffs," said Raimondo -- who volunteered to do her part for cost savings by announcing Thursday evening that she would be taking a 5% paycut herself.
Winner
Kindergarteners
At the same time the State expands access to pre-K classes, some communities still do not offer full-day kindergarten. "The Governor has noted the importance of providing quality full-day kindergarten in all of our communities. Her budget includes an additional $1.4 million to expand full-day kindergarten to children in every city and town by August 2016. Finally, to ensure that our teachers reflect the growing diversity of Rhode Island’s children, the budget includes $250,000 in grant funding to recruit and train more diverse teachers," wrote the Raimondo office.
Photo: woodleywonderworks/Flickr
Loser
Hospitals
For DHS, the Governor recommends reinstituting the hospital licensing fee at 5.703 percent on FY 2013 net patient revenues to increase FY 2016 licenses and fees revenues by $156.1 million.
