With budget season and vaccination efforts in full swing, and the state set to receive another windfall in federal aid, RIPEC brings you a brief update on the major public policy issues impacting the Ocean State.
RIPEC on Public Policy
- RIPEC’s redesigned edition of its “How Rhode Island Compares” series placed Rhode Island’s state and local revenues and expenditures in national, regional, and historical context. Among RIPEC’s findings were that the Ocean State significantly overspends on K-12 education and underspends on higher education as compared to other states. As part of the report, RIPEC released the first in a series of interactive datasets on its website.
- Providence Business News, “RIPEC: R.I. comparatively underspends on higher education, but overspends on K-12”
- In appearances on The Public’s Radio’s Political Roundtable and WPRI’s Newsmakers, RIPEC President and CEO Michael DiBiase suggested that state policymakers use new federal American Rescue Plan aid for strategic one-time investments. “I would like to see the state use [American Rescue Plan funds] for big bold ideas that could transform the state, that could actually change our economic prosperity or our quality of life in some fundamental way,” he told The Public’s Radio.
- In an Op-Ed published in the Providence Journal and Warwick Beacon, as well as in a discussion with the Greater Providence Chamber of Commerce, Michael DiBiase stated that recent proposals to add a new top state personal income tax bracket threaten “to impose a higher tax burden on businesses, and particularly on small businesses, at a time when many businesses are struggling to survive and recover from the pandemic’s economic fallout.” The tax hike would “hurt the state’s ability to attract and retain business and investment,” he wrote.
- RIPEC weighed in against legislation to impose a three-year moratorium on the expansion of public charter schools that would retroactively nullify preliminary approval of new charters and the expansion of existing charter schools. Michael DiBiase testified that “differences in student proficiency between charter schools students and students from the same city or town are staggering—with outcomes two or three times better than the traditional public schools.”
- Michael DiBiase told GoLocal Prov that Governor McKee’s fiscal year (FY) 2022 budget proposal was a “status quo” budget, and while he described the governor’s approach in generally favorable terms, he questioned the continued phaseout of the car tax, warning that it may not be permissible for the state to use American Rescue Plan funds to cut taxes.
- In their State Budget Updated for Winter 2021, the National Conference of State Legislators found that, overall, states’ general fund revenues are down from previous years but are either meeting or exceeding revised estimates. Rhode Island is among the 31 states determined to be meeting revised estimates for FY 2021.
- The American Rescue Plan Act’s prohibition against using federal aid to cut state or local taxes raises a raft of thorny issues, as detailed in a recent Tax Foundation article. RIPEC was one of 17 nonprofit public policy organizations to sign onto a letter to Treasury Secretary Janet Yellen asking for guidance on this prohibition.
- A recent Wallethub report found that Rhode Island has the 8th highest tax burden in the country. Regarding its property tax burden, the Ocean State ranked 5th highest.
What to Look for in April
- The General Assembly is in full swing and the governor’s proposed $11.2 billion budget has been released, so expect budget article hearings in House and Senate Finance throughout the month.
- The Revenue Estimating Conference will not be held until the first week of May, but the economic forecasting and departmental testimony that the conference principals use to generate estimates will begin in late April.