As vaccination efforts continue, the federal government considers additional stimulus, and budget season ramps up, RIPEC brings you a brief update on the major public policy issues impacting the Ocean State.
RIPEC on Public Policy
- RIPEC released “An Introduction to Municipal Finance in Rhode Island,” the first in a series of reports on the fiscal health of Rhode Island’s 39 cities and towns. The report establishes a foundational overview of the structures of municipal finance in Rhode Island. Among its findings are that a wide variation in assessed property values significantly affects tax rates and the extent to which municipalities rely on state education aid, raising serious concerns as to equitable education funding. RIPEC will be discussing the report in further detail at upcoming trainings with municipal and school leaders.
- Boston Globe, “RIPEC floats an interesting idea for improving school funding”
- Providence Business News, “Report: ‘Property wealth’ gaps among R.I. municipalities causing education disparities”
- RIPEC, in partnership with the Economic Progress Institute, is supporting a new Rhode Island Foundation initiative, Make It Happen: Investing in Rhode Island’s Future. The initiative brings together a 15-member steering committee to develop recommendations for the state’s investment of $1.1 billion in federal American Rescue Plan Act funding.
- Describing charter public schools as “one of the few bright spots in Rhode Island’s K-12 system” in an Op-Ed published in the Providence Journal and Warwick Beacon, RIPEC President and CEO Michael DiBiase argued that all education legislation should improve upon the state’s “education system and student outcomes.” The charter school moratorium under consideration by the General Assembly would be “a step in the opposite direction,” DiBiase commented.
- Speaking to the Boston Globe about Governor McKee’s proposal to waive state income tax exemptions for federally forgiven paycheck protection program (PPP) loans above $150,000, Michael DiBiase pointed out that individuals with businesses set up as pass-through entities may be adversely affected.
- A new report backed by the Rhode Island Department of Education on the learning losses sustained by Rhode Island’s K-12 students during the pandemic is filled with a number of troubling findings, including that existing performance gaps in reading and mathematics for students of color, differently-abled students, multilingual learners, and students eligible for free or reduced lunch have widened in the last year. In some cases, students are performing at one or more grade levels lower in the 2020-21 year than in the previous school year.
- An analysis from the Tax Foundation found that, as of April 20, PPP loans were tax exempt in all but 11 states. Rhode Island’s closest neighbors, Massachusetts and Connecticut, are among the majority, though fellow New England states Vermont and New Hampshire are among those treating the forgiven loans as taxable income.
- IHS Markit gave testimony to the principals of the Revenue Estimating Conference last week on Rhode Island’s economic forecast. Included in their findings were that, as of February 2021, employment of workers with wages in the bottom quartile was still down over 25 percent when compared to January 2020. IHS Markit forecasted that Ocean State employment will “proceed at a steady, yet decelerating pace” as recovery continues.
What to Look for in May
- Between an influx of federal dollars under the American Rescue Plan Act, an improved economic forecast from IHS Markit, and positive revenue projections from the Rhode Island Department of Revenue for March, it seems as if the General Assembly will have significantly more money to work with than assumed in the governor’s March budget submission. However, we will learn much more about the budget outlook after the Revenue Estimating Conference makes its final projections on May 10th.
- Congress is continuing negotiations over President Biden’s proposed American Jobs Plan Act, which would invest about $2 trillion nationwide on broadly defined infrastructure projects, from transportation and education to drinking water and R&D. What the bill will ultimately contain if it successfully makes its way through Congress is uncertain, as is what portion of these funds would make their way to the Ocean State.