PROVIDENCE — Poised between peril and opportunity, confronting a pandemic and a housing crisis while flush with federal cash and a huge state surplus, Governor Daniel J. McKee’s administration on Thursday unveiled not one but three significant budget proposals.
Administration officials outlined a $12.8 billion state operating budget proposal for fiscal year 2023. But they also detailed plans to spend the bulk of the state’s $1.13 billion in American Rescue Plan Act funds on housing, small business, and climate change initiatives. And they proposed tapping a $618.4 million budget surplus to pay for capital projects such as a new $108.2 million Zambarano hospital.
“It has been said that the four most dangerous words in finance are ‘This time it’s different,’ but budgeting during a time of COVID requires a certain focus on unique issues that we must address,” Administration Director James E. Thorsen said. “Specifically, protecting Rhode Islanders amid a global pandemic, providing a fiscally responsible proposal to use the American Rescue Plan Act dollars, and laying the foundation for an enduring recovery.”
The General Assembly has already approved spending $119 million of Rhode Island’s American Rescue Plan Act funding – a 10 percent “down payment” on pandemic recovery measures. But on Thursday, budget officials fleshed out plans for the full $1.13 billion.
The biggest chunk, $250 million, would go into housing and homelessness assistance. That includes $90 million to “create and preserve” about 1,500 units for households earning up to 80 percent of the area median income ($69,200 for a four-person household).
That includes $50 million in down payment assistance. “Home ownership is one of the most important ways to build generational wealth, yet Rhode Island has one of the lowest home ownership rates in the country, largely because many households cannot afford the down payment,” the budget says.
That includes a $25 million grant program, administered by Rhode Island Housing, for the acquisition of properties to be redeveloped into affordable housing. That might help Central Falls, which is seeking $4.5 million for site acquisition costs to build about 200 apartments in the small, densely populated city.
That includes $20 million to support “workforce housing” projects. “One thing we have heard from working-class and middle-class families in Rhode Island is it is difficult to find housing if there is no housing stock,” Office of Management and Budget director Brian Daniels said. “Sometimes, there is a financing gap that makes it difficult to build workforce housing.”
And that includes $26.5 million to assist people experiencing homelessness or housing instability. “So you have a continuum of services from assisting people experiencing homelessness to down payment assistance to make sure all Rhode Islander have access to housing,” Daniels said.
The administration has been coming under increasing pressure to tap federal funds to address homelessness.
In December, McKee announced the addition of 130 additional emergency shelter beds for people facing homelessness. That came after advocates accused the McKee administration of sitting on millions in federal relief funds while a homeless crisis worsened and winter weather rolled in. Also, state Senator Cynthia Mendes, a progressive lieutenant governor candidate, and Matt Brown, a progressive gubernatorial candidate, slept in tents outside the State House to press for action on homelessness.
The state must budget the $1.13 billion before the end of 2024 for projects that are completed before the end of 2026. Besides the $250 million for housing, that budget includes:
- $211.8 million for economic and workforce development
- $180.5 million for aid to small business and industries impacted by the pandemic
- $152.2 million for public health
- $132 million for climate change initiatives
- $118.5 million for children, families, and education
- $42.3 million for behavioral health
- $26.4 million for public infrastructure and technology
- $16.9 million for administrative costs
In December, Rhode Island’s child advocate Jennifer Griffith sounded the alarm, telling a state Senate committee that children in state care are not getting the services they need and are often being shipped out of state. “When I tell you that the situation has become much more dire and frankly dangerous in the last 60 days, I am telling you the truth,” she said at the time. “I am telling you that we are at an extreme level of desperation.”
The budget proposal includes $6 million to establish one or more psychiatric residential treatment facilities.
“Rhode Island does not have intensive residential treatment options for adolescent girls and young women who face severe and complex behavioral health challenges,” the budget says. “Funding will support at least one (facility) and prevent disruptive out-of-state placements for this vulnerable population.”
Budget officials said the funding could support two or three facilities but they did not have details on the locations.
The budget includes $15 million to set up “municipal learning centers,” which would provide programs such as tutoring, art and music classes, early education opportunities, and nonprofit services. The programs would be available year-round, but especially during out-of-school time and vacations. The centers would begin in 11 communities, but the goal is to have at least one in each of the state’s 39 cities and towns.
The budget proposal includes $10 million for a “minority business accelerator” that would provide support such as technical and financial assistance, entrepreneurship training, space for programming and co-working, and access to low-interest loans.
The proposal includes $3.3 million to outfit the Adult Correctional Institutions with Wi-Fi.
“When programming was halted at the Adult Correctional Institutions to slow the spread of COVID-19 at the beginning of the pandemic, educational opportunities were delayed because the facility lacks the Wi-Fi connectivity needed for online learning,” the budget explains. “Reliable internet access will allow incarcerated individuals to complete online courses and build the skills needed for post-release education and employment, helping to reduce transitional barriers”
And the proposal includes $46 million to renovate the Port of Galilee, which takes in more than 48 million pounds of seafood every year, making it one of the largest commercial fishing ports on the East Coast. The funding would pay for replacing the North Bulkhead, replacing docks, and upgrading the coastal resources maintenance building.
In his state budget proposal, McKee again proposed legalizing the recreational use of marijuana by adults. A similar proposal stalled in last year’s legislative session in part because the Senate proposal would create a new Cannabis Control Commission while McKee’s proposal would keep those regulatory powers with the state Department of Business Regulation.
The budget proposes a program “anchored in principles of equity, public health, and safety.” It would invest in Health Equity Zones and law enforcement training, and it would allow for the automatic expungement of marijuana-related convictions. The proposal would create a weight-based excise tax on marijuana cultivation, an additional retail excise tax of 10 percent, and also apply sales tax to cannabis transactions.
The state budget proposal would continue phasing out the motor vehicle excise tax – a cause championed by former House Speaker Nicholas A. Mattiello. The budget includes $166.6 million to compensate cities and towns for lost revenue.
McKee wants to place three borrowing proposals totaling $350 million on the November ballot:
- A $250 million K-12 school construction bond, which would provide $200 million for school construction projects and $50 million for the School Building Authority Capital Fund to fund projects addressing health and fire safety code deficiencies.
- A $62 million higher education bond, including $50 million for improvements to the University of Rhode Island’s Narragansett Bay campus.
- A $38 million green economy bond, including $16 million for matching grants to help municipalities improve the resiliency of infrastructure, vulnerable coastal habitats, and floodplains, $5 million for grants to remove obstacle to clean energy projects, $3 million to restore and protect water quality, and $3 million for forest and wildlife habitat.