$9.2B spending plan includes revenue from new Internet sales taxes

Jan. 20--PROVIDENCE, R.I. -- Gov. Gina Raimondo counts on Rhode Islanders paying sales tax when they shop online to finance a series of big initiatives, including tuition-free years at state colleges, in a $9.25-billion state budget proposed Thursday.

The tax and spending plan for the fiscal year starting July 1 would raise total expenditures by $309 million, or 3.5 percent, over the budget passed by lawmakers for this year.

Online giant Amazon has told state officials it will begin collecting sales tax on Rhode Island purchases in February, a move they hope will trigger other companies to follow suit. But for those sites that don't, the budget proposes new measures to compel them.

They include online notifications telling buyers they owe the 7 percent sales tax when they purchase merchandise followed by letters in the mail.

Raimondo includes $35 million from online sales tax collection in the fiscal 2017-2018 budget and expects revenues to grow 15 percent the following year.

As she has in the last two years, Raimondo again looks to wring savings out of health-care providers and budgeted $39 million in Medicaid cuts born by hospitals nursing homes and insurers.

The budget would freeze hospital and nursing home reimbursement rates until next January and then cut them 1 percent, generating $11 million. It would cut $12 million in long-term care administrative fees to Neighborhood Health Plan.

"Rhode Island's skilled nursing centers are currently facing crisis-level financial struggles due to the ill-fated [public benefits computer system] rollout," wrote Virginia Burke, president and CEO of the Rhode Island Health Care Association, in a statement. "Governor Raimondo's proposed budget compounds these financial struggles with an astonishing blow to nursing facility funding."

Although Raimondo has talked extensively about the threat to Rhode Island posed by potential federal cuts to Medicaid -- which covers nearly a third of the state's population -- the budget does not attempt to prepare for such an outcome.

"...Hospitals could struggle with $1.7 billion in cuts on top of the $1 billion in reductions used to fund implementation of the Affordable Care Act," wrote Michael Souza, president of the Hospital Association of Rhode Island, in a statement expressing disappointment in Raimondo's budget.

Smokers would pay $8.7 million more as the budget raises cigarette taxes from $3.75 to $4.25 per pack.

The Raimondo administration says the proposed budget does not require any broad-based tax increases.

After two years focused on stimulating business investment and raising money for highway construction, Raimondo's third budget includes progressive proposals such as two years of free public college, a 90-cent minimum wage hike and promise to cut $58 million in car taxes starting next year.

"The wind is finally at our backs in Rhode Island," Raimondo wrote in a letter introducing the budget. "We will significantly improve the future economic competitiveness of our children by giving every student an affordable pathway to a post-secondary degree."

Providing a free ride for Rhode Island residents at the Community College of Rhode Island and tuition-free junior and senior years at the University of Rhode Island and Rhode Island College is expected to cost $10 million in fiscal 2017-2018 before rising to $30 million in four years.

URI President David Dooley said the tuition plan is likely to increase the university's in-state enrollment 20 percent by 2021, which could require new dormitories and other facilities.

As she promised last year, Raimondo proposed adding the state Emergency Management Agency to the Department of Public Safety and hiring a new civilian public safety commissioner to oversee the agency, which includes the state police.

For the first time since the 2013-2014 fiscal year, the budget does not includes a 38 Studios debt payment, as recent court settlements will cover next year's $12.5 million tab.

Also for the first time, the budget includes revenue -- $38 million -- from the network of tolls on tractor-trailer trucks approved over significant opposition last winter.

The budget would delay the launch of new license plates, now slated for April, until April 2018.

And the budget includes $300,000 to provide free bus tickets for low-income senior and disabled Rhode Island Public Transit Authority riders whose free passes are being discontinued. The budget would not head off a planned 50-cent fare increase for other passengers.

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