A marathon meeting of the State’s Revenue Estimating Conference resulted in an agreement that the State of Rhode Island is facing a $60.1 million shortfall in the current year revenues and a $39.5 million revenue shortfall for FY2018. The Corporate tax collections are expected to bring in $125 million this year – last year the state collected $134.9 million; and the revenue associated with the collection of sales tax on internet sales was also less than expected. These are just two of the line items that came in low. In addition to the revenue challenge, expenses were up by about $15 million. What does that mean? Officials must find a way to close a $100-$115 million gap. House Finance Chairman Marvin Abney stated that previous legislatures have gone through this before and that they will find a way to do it again. “We have to,” he said. The Chairman, now overseeing the creation of his second budget, suggested that the committee needs to look at current programs to determine what is working positively for the state, and then look at options for cutting expenses.
State law requires a budget to be passed by June 30th. The legislature hopes to meet that deadline with time to spare.
Senate Labor Committee Passes Wage Lien Bill
S.192, An Act Relating to Labor and Labor Relations – Payment of Wages passed the Senate Labor Committee with a few amendments, much to the surprise of members of the business community. It is scheduled to be voted on by the entire Senate Wednesday 17th. Unfortunately, the changes to the bill were minimal. This bill would allow employees to place a lien on an employer’s property if he/she believes wages have not been properly paid. The process is as follows:
1. Employee sends letter to employer stating the amount owed in wages and the address of the employer’s property that the employee intends to place a lien against
2. The employer has 90 days (amended from the original 30 days) to file a complaint in Superior Court in order to stop the lien. If no complaint is filed within the 90 days (amended from the original 30 days), the employee can file the lien in the land evidence record of the city/town where the property is located.
3. If the employer files the complaint and the court finds for the employee, the lien can be filed in the land evidence record (automatic award for court fees and attorney fees was removed from the bill).
S.192 provides little due process rights for employers and encourages employees to use the process because the employee has no costs associated with sending a letter, and very little cost for filing a lien. Additionally, even if the employer believes no wages are owed, it will be cheaper to pay the employee the amount demanded than to pay court fees and attorney fees to fight an unfounded or misunderstood claim. It is important to note that the Department of Labor and Training supported the concept of the bill.
The Chamber opposes the passage of S.192.
Treasurer Releases Local Pension Plan
General Treasurer Seth Magaziner is circulating a plan to address the problem of municipal underfunded pension programs – called the Healthy Local Pension (HELP) proposal. Most of the 34 locally administered pension plans are currently less than 60% funded, qualifying for critical status, and 12 plans finished FY2015 with a funding level below 40%. The escalating liabilities affect municipal investments in infrastructure and schools as well as the local tax structure.
The HELP legislation provides an optional pathway for these communities to join the state-run MERS system, which provides lower overhead costs, professional management and responsible governance. All 116 plans already in MERS have an average funding level of 83%. Under current law, however, a municipality must conform immediately to the MERS requirements such as retirement age, years of service and length of amortization schedules in order to join the program. The Treasurer’s proposal would allow municipalities to join MERS and phase in their plans to eventually match the MERS requirements. One option would allow municipalities to maintain their current benefit levels for existing employees, but require all new employees to confirm to MERS requirements. Municipalities could also choose to renegotiate benefits with existing employees in order to reduce their unfunded liability faster. The bill would also provide an option for municipalities with closed plans, in which no new participants will be added, to turn over management of the systems to Treasury without changes in benefits. These closed plans would not be considered part of the MERS system.
The Chamber supports the HELP proposal.
The following new bills were filed:
House Bill No. 6203, AN ACT RELATING TO EDUCATION -- THE EDUCATION EQUITY AND PROPERTY TAX RELIEF ACT (Permits the Cumberland Town Council to establish limits on the number of students from the Cumberland school district who may enroll in any charter public school, Davies, and the Met Center.) This bill is scheduled to be head in the House Health, Education & Welfare Committee Wednesday, May 17th at approximately 4:30pm.
House Bill No. 6211, AN ACT RELATING TO LABOR AND LABOR RELATIONS -- INDIVIDUALIZED WORKER SAVINGS ACCOUNT PROGRAM ACT (Abolishes the current temporary disability insurance program and replace it with a more flexible, expansive and mandatory new program that compensates all workers who become disabled due to non-work related injuries.)
Senate Resolution No. 882, SENATE RESOLUTION CREATING A SPECIAL LEGISLATIVE COMMISSION TO CONDUCT A COMPREHENSIVE REVIEW AND MAKE RECOMMENDATIONS REGARDING THE CREATION OF A WORLD-CLASS EDUCATION SYSTEM IN RHODE ISLAND (Creates an 11 member commission to conduct a review and make recommendations on the creation of a world-class education system in Rhode Island, and who would report back to the Senate by March 1, 2018, and expire on July 1, 2018.)
Senate Bill No. 886, AN ACT RELATING TO PUBLIC UTILITIES AND CARRIERS --DUTIES OF UTILITIES AND CARRIERS (Requires pub. utilities/electric distribution cos. to provide prompt/adequate service to ratepayers for new service/upgrades with penalty up to $10,000 with electric distribution cos. to provide written estimates/itemized bill for work in excess of $500.)
Senate Bill No. 888, AN ACT RELATING TO HEALTH AND SAFETY -- ELECTRONIC WASTE PREVENTION, REUSE AND RECYCLING ACT (Amends the electronic waste preventions, reuse and recycling act.)