As fiscal year 2022 commences, RIPEC brings you a brief update on the major public policy issues impacting the Ocean State.
RIPEC on Public Policy
- RIPEC released “Rhode Island’s FY 2022 Budget Outlook,” the fifth in a series on the fiscal impact of COVID-19. The report discusses the extent to which Governor Daniel J. McKee’s proposed FY 2022 budget utilized one-time federal funding to pay for ongoing state expenditures, analyzes projected increases in available state resources, and summarizes the federal resources under the American Rescue Plan Act. RIPEC’s report also makes several recommendations to policymakers, including that the state should avoid spending beyond available revenues going forward, repay the rainy day fund, and address major cost-drivers like the Eleanor Slater Hospital.
- RIPEC President and CEO Michael DiBiase joined members of the business community in a press conference to argue against attempts by some policymakers to create a new higher earner income tax bracket and apply state income tax to federally exempt Paycheck Protection Program loans exceeding $150,000. “Given all this revenue, why would we raise income taxes, or any taxes?,” DiBiase asked.
- In response to a plan from the City of Providence to borrow up to $850 million in pension obligation bonds, Michael DiBiase submitted written testimony to the House Committee on Finance that acknowledged the “enormous challenge” Providence’s $1.2 billion unfunded pension liability poses but warned that the city’s proposal “carries considerable investment risk,” and “contains no structural reforms of pension obligations.”
- WPRI, “Magaziner: Don’t let Providence borrow $850 million for pensions”
- Providence Journal, “State treasurer criticizes ‘risky’ pension obligation bill”
- Providence Business News, “Elorza seeks to head off concerns on pension bond proposal in pitch to lawmakers”
Inside Insights
- The $13.1 billion state budget for FY 2022 has been passed by the House and is expected to be passed by the Senate and signed by Governor McKee. The budget includes billions in federal recovery funds and avoids broad-based tax increases. The Assembly modified the Governor’s proposal to tax Paycheck Protection loans such that only loans exceeding $250,000 will be subject to state income tax, and tax payments can be deferred until 2022.
- The pandemic and distance learning continue to have troubling consequences for K-12 education in the Ocean State. According to a recent report from WPRI 12, chronic absenteeism at Providence Public Schools—by far the largest public school district in the state—shot up during the 2020-2021 school year, reaching 60 percent at the end of April 2021, compared to 37 percent in April 2020. RIPEC’s report on school closures and reopening in the fall brought to light the shortcomings of distance learning and inequities across the state.
What to Look for in July
- With $1.1 billion in largely discretionary federal stimulus funds available to the state under the American Rescue Plan Act, expect discussion on how best to invest those funds to continue throughout the summer. The Rhode Island Foundation’s Make It Work: Investing in Rhode Island’s Future initiative is soliciting community input, and the McKee administration is hosting a series of virtual community conversations, Rhode Island 2030.
- After receiving support from the White House last week, Congress will continue to work towards passing the Bipartisan Infrastructure Framework. The $1.2 trillion plan would fund roads, bridges, passenger rail services, electric vehicle infrastructure, lead remediation, and broadband.
