Chamber Connections BLOG
Chamber Connections BLOG
It’s All About the Budget
At close to 1:00am Friday morning, the House Finance Committee passed a FY2018 budget capping out at $9.2 billion. As promised, the bill contained no new broad based taxes, made some cuts, added new spending and included the phase out of the car excise tax. The budget now must lay on the House desk for seven days, although both Democrats and Republicans agreed to bend the rule slightly to allow the House to begin voting on the bill this Thursday. Because the House adopted a 10pm rule whereby debate is supposed to stop at 10pm, it is likely house members will need two days to debate the proposal. All proposed amendments must be submitted by representatives by 4pm today.
The Governor was successful in getting a portion of her Promise RI free tuition program. If enacted, students who graduate or achieve a GED by age 19 will qualify for two years of free tuition at CCRI, expected to cost $4.5 million. The student would be required to maintain a 2.5 gpa and to reside in Rhode Island for two years after graduation. No community service requirement is attached to the tuition program. Since the unveiling, some have questioned what will happen to students who decide to go on to college to obtain a bachelor’s degree. If they go to a school outside Rhode Island, technically they would be in default. It’s unclear if the student would need to pay the tuition back to the State in this situation.
The minimum wage will increase from $9.60 per hour to $10.10 January 1, 2018 and to $10.60 January 1, 2019. This increase was a partial victory for the business community. The increase is spread over two years allowing businesses to adjust to the higher labor cost.
The Speaker’s effort to phase out the car excise tax was included in the budget. The fiscal impact is $26 million for the first year of the phase-out.
The timing for corporate estimated tax payments will change if this budget passes. Article 8 calls for mirroring the federal tax law. Payments would be due April 15th, June 15th, September 15th and December 15th. This appears to be a positive change for business.
Article 7 includes the authority for the state’s purchasing officer to establish up to a 1% administrative fee that would be collected from all state contractors listed on master price agreements. The fees are to be deposited into a restricted receipt account to be utilized for implementing technology for e-bidding, on-line vendor registration, bid notifications and other costs related to procurement costs. The 1% fee would likely be rolled into the bid submitted by contractors for the various projects.
One surprise to some was the inclusion of the proposal to eliminate registration fees on trucks or tractors over 4,000 pounds. There certainly was a political will to eliminate the fees, but it was unclear whether the money to do so would be available. The proposal survived.
The question most asked is, “how does the budget add new programs, not expand broad based taxes, and still remain balance?” Good question. The budget calls for a $25 million decrease in spending and calls upon the Governor to make the cuts accordingly. Likewise, the legislative budget has been cut by $2 million. National Grid’s Electric Distribution Fund (the fund Rhode Islander’s pay into for efficiency programs) is scooped by $12.5 million. The Infrastructure Bank is scooped by $2.5 million. The Refundable Investment Tax Credit saw a $3.25 million cut. The Refundable Job Training Tax Credit was reduced by $2 million. The RI Health and Education Building Corporation gets a $4.8 million scoop. Quonset Development Corporation gives up $1 million; RI Housing loses $1 million; NBC has $2.5 million removed; the PUC must begin paying rent for its building to the tune of $333,420.00. It has been reported that the total one-time scoops are just over $60 million. One could certainly argue that it is all “state money” (collected in different ways) that is being reallocated for alternative uses.
What’s not in this budget is an expansion of marijuana dispensaries or the legalization of marijuana. Also, there is no proposal to tax sugary beverages.
Paid Leave Bill Posted for Vote
On Wednesday at the Rise the Senate Labor Committee is scheduled to vote on the Paid Leave bill – S.290, An Act Relating to Labor and Labor Relations – Healthy and Safe Families and Workplaces Act. This is the bill that would require employers to provide paid leave to their employees. It’s unclear at this time if the bill will be amended in any way. As written, the bill requires employees to be given 7 days paid leave; the employer cannot ask for any documentation until 72 hours have passed; the leave can be used for the person or anyone they have an affinity to; and the time is accrued at 1 hour for every 40 hours worked.
The following new bill was filed:
House Bill No. 6328, AN ACT RELATING TO LABOR AND LABOR RELATIONS - UNLAWFUL EMPLOYMENT PRACTICES (Prohibits an employer, employment agency, labor organization, or employee, to commit any act declared to be an unlawful employment practice; individuals would be held personally liable for such conduct.)