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House lawmakers voted to tap Rhode Island’s billion-dollar federal COVID cash bonanza Thursday night and deliver election-year tax cuts, new social services spending and the construction of new homes in a $13.6-billion state budget for next year.

The final vote around 9 p.m. was 61-9 with all but one House Republican — Rep. Barbara Ann Fenton-Fung of Cranston — in opposition.  

The tax cuts in the spending plan for the year starting July 1 include $250 checks for parents, the expedited elimination of the car tax and exemption of military pensions from income tax.

Minutes before the final vote, House Finance Committee Chairman Marvin Abney said that many people “for the first time” many people will feel like they got something from the budget.

But despite the “targeted tax relief” that House Speaker K. Joseph Shekarchi, Senate President Dominick Ruggerio and Gov. Dan McKee agreed to, Republicans objected to the tax bills that remained untrimmed while the state is projecting an unprecedented surplus. 

The politics of the pump

Badly outnumbered, they proposed amendments that would have cut taxes on gasoline, retirement income and electric bills, but  were beaten back by the Democratic majority.

“Who is going to benefit from ending of the [car] tax early? It is not going to the person driving around in the jalopy because they stopped paying he car tax a couple years back,” Rep. David Place, a Burrillville Republican, said as he introduced an amendment that would have created a 90-day suspension of the state gas tax. 

“The person who is going to benefit from this is the person driving around in the brand new Mercedes or BMW. I want to help the everyday person…. not targeted relief for people with brand new cars”

The gas tax holiday would have been paid for with federal money set aside for emergency COVID-19 response in 2025.

“I’d rather use that money now to help people suffering from the gas tax,” House GOP leader Blake Filippi said. 

But Democrats argued that it is important to have money set aside for a potential future COVID resurgence, and that a gas tax holiday in neighboring Connecticut has produced marginal relief at the pump. 

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Rep. Teresa Tanzi, D-South Kingstown, said the average price of self-serve unleaded fuel in Massachusetts is $5.03 per gallon, Connecticut $4.98 and Rhode Island $5.

“We are talking about a difference of 2 cents,” Tanzi said. “We are going to take millions of dollars away from our residents for 2 cents. I can’t understand why we as a state would want to put that money into big oil and into the refineries.” 

The amendment would have fined gas stations that didn’t pass the tax cut along to consumers, but House Majority Leader Chris Blazejewski argued that it was virtually unenforceable.

The gas tax holiday amendment was killed 11-56 with Rep. James McLaughlin of Cumberland the only Democrat to join all 10 House Republicans voting yes.

Rep, Robert Quattrocchi, R-Scituate, thanked Democrats for providing “the great campaign literature I will have” with their vote against the gas tax holiday. 

What about the cost of electricity? 

Two Democrats joined the GOP caucus voting for an amendment from West Warwick Republican Rep. Patricia Morgan that would have cut taxes on electricity and paid for it by eliminating $40 million budgeted for film tax credits.

“This body has looked at the film credits over and over again and they do not yield economic value to the people of Rhode Island,” Morgan said. “But giving them a tax break on their electric bills will. Every single one of your constituents will benefit.”

Warwick Rep. Joseph McNamara, who is also the state Democratic party chairman, said the state Office of Revenue Analysis studies of the film tax credit that showed it not breaking even failed to take into account the “multiplier effect” of movie production spending in the state. 

Another amendment similarly voted down would have moved $7.5 million now budgeted for 2025 into the Low Income Home Energy Assistance Program for upcoming winter.

Where is American Rescue Plan money going?

In addition to the tax cuts, the budget, which would spend $500 million more than the state budgeted this year, includes a blast of new spending on housing, corporate incentives and social services.

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The budget includes $250 million from the federal American Rescue Plan for housing affordability programs, including grants for the construction of income-limited apartments and $10 million in down-payment assistance for first-time homebuyers.

The down-payment assistance is up to $17,500 and can pay for a property with up to four units.

Rep. George Nardone, R-Coventry, wanted to limit it to purchases to only two units.  

An amendment introduced by Democratic leadership and quickly passed before lawmakers broke for dinner would have made sure a $10-million pilot program in the budget be used exclusively for “public housing.” 

It is a lot smaller than the $300 million for public housing, and the creation of a new state housing development agency to build it in the Senate’s Create Homes Act.

But Reclaim Rhode Island, which has lobbied for Austrian-style “social housing,” celebrated the amendment.

“The inclusion of funding for a pilot public developer program… shows just how far we have moved the conversation on how to solve the housing crisis,” Reclaim political director Jordan Goyette said. 

House members also celebrated Medicaid rate increases in a raft of areas struggling to retain workers and deal with rising costs.

They include rate increases for dental care and the Early Intervention program for young children with developmental delays.

Is there money for the healthcare staffing crisis?

Yes.

House members also celebrated Medicaid rate increases in a raft of areas struggling to retain workers and deal with rising costs.

They include rate increases for dental care and the Early Intervention program for young children with developmental delays. The budget also includes 

“We are making historic and critical investments that are going to support and transform the lives of working people and families, from Medicaid recipients to those engaged in the care economy,” Rep. David Morales, D-Providence, said. “Reimbursements rates across the board will be receiving the much needed increases they have needed for years. From early intervention to home health investments. e are going to make sure all Medicaid recipients, from kids to our rising seniors are in a position to receive the health care treatment they need in an urgent manner.”

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Foster Republican Rep. Michael Chippendale said there should also be something to encourage more people to go into nursing. He proposed using $400,000 to waive all fees for students studying to become Certified Nursing Assistants. It was voted down on party lines.

Will I have to pay car tax this year?

The budget gets rid of the car tax permanently, once it becomes law — expect if you live in East Providence.

Because East Providence’s fiscal year lags behind the rest of the state, it is set to have one more year of car tax bills while the rest of the state’s tax payments are over. 

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A budget amendment introduced by House leadership and passed would cut the car tax in East Providence further next year, but not eliminate it.

The same budget amendment also restored a $150,000 sales exemption for the trade-in value of motorcycles that the Finance Committee had cut from Gov. Dan McKee’s budget proposal.

What is the “blue economy?”

The budget includes $70 million in federal money over three years for an Executive Office of Commerce collaboration with the University of Rhode Island to advance water-based industries.

The money only gets paid out if the URI wins at least $35 million from a U.S. Economic Development Administration grant program. 

Republicans proposed an amendment that would have dipped into the Blue Economy money to restore a small business loan program sought by McKee, but the amendment was rejected.

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