PROVIDENCE — Here are seven things to know about the 2023 State of the State address that Rhode Island Governor Daniel J. McKee delivered on Tuesday:
Calls for cutting R.I.’s sales tax rate
The governor proposed “a broad tax relief plan” that he said would help residents “navigate inflationary pressures and make our state a more competitive place to do business.”
The announcement comes days after an analysis found that Rhode Island has fallen to the bottom 10 states for business tax competitiveness for the first time in years. After analyzing the Tax Foundation’s 2023 Business Tax Climate Index, the Rhode Island Public Expenditure Council found that Rhode Island ranked No. 42, which is the ninth worst, in the nation.
McKee proposed reducing Rhode Island’s 7 percent sales tax rate, which he said is now tied for the second highest rate in the country.
“Rhode Island’s sales tax was increased during the banking crisis with the promise that it would be reduced when we were back on solid financial ground,” he said. “That promise was never kept. Now is the time to make it right.”
He called for cutting the rate in increments, beginning by lowering it to 6.85 percent, which he said would save residents about $35 million a year. And he said Rhode Island could lower the rate to match the 6.25 percent rate in Massachusetts “if we continue to have discipline in our budgets.”
McKee called for halting a scheduled increase in the state gas tax. Rhode Island law requires a 3 cent increase on the gas tax starting July 1, but he proposed stopping that increase to “provide nearly $25 million of gas tax relief to Rhode Islanders over the next two years.”
He also called for providing a tax rebate for the gross receipts tax on energy bills, saying that would result in over $35 million in relief for tax relief.
Vows to build housing department that’s “up to the challenge”
The governor said he is committed to “building a capable Department of Housing that is up to the challenge and opportunity that this moment represents.”
McKee called housing “one of the most critical issues facing Rhode Island today and over the next decade.” And he said that is why his administration proposed using $250 million to create and support more housing across a range of income levels.
He said the state now has about $90 million in funding available for developers, and 39 projects have been funded that are expected to create or preserve more than 1,000 units of affordable housing.
“My budget will create a robust state agency, with additional funding to help our unsheltered population and set them on a pathway to housing,” McKee said. “But one person, one department, or even one entire administration can’t address this problem alone.”
He said the legislature, municipalities, developers, nonprofits, labor, the business community, and others must play a role in addressing the housing problem.
Strives to reach Massachusetts education levels by 2030
McKee said that within the next 100 days, his administration will outline a plan “to reach Massachusetts education levels by 2030.”
“As always, to achieve this, we will work with anyone who is willing to do the work both in and outside the classroom,” he said.
McKee noted that the pandemic had “a dramatic impact” on children’s education. “And while we’re glad that our kids got back into the classroom as quickly and as safely as possible, we know that there are years of recovery ahead,” he said.
For the last three years, the state budget has held communities harmless for student enrollment changes during the pandemic, he said. Since the pandemic, public-school enrollment has declined by about 5,700 students, and if the state simply went back to the regular school funding formula, that would take $30 million from traditional public schools, he said.
So, McKee said, “It is time for us to make a targeted modification to the funding formula to improve outcomes and support students with greater needs.”
He said his proposed budget will add $57 million in K-12 education and $4 million for out-of-school learning programs, and the budget proposal will fully fund multilingual learners and high-cost special education.
New Senate Majority Leader Ryan W. Pearson, a Cumberland Democrat, has been arguing for the state to tweak the multibillion-dollar state education funding formula for cities and towns for several years, and he thinks 2023 might finally be the time to get it done. He has said he’s particularly interested in providing more funding for multilingual learners, the fastest-growing group of students in the state.
Proposes “major investment” in life sciences
McKee said there has been talk about Rhode Island becoming a hub of bioscience activity, and the foundation for that has taken shape in recent years. But now, he said, “It’s time to double down and make a major investment in Rhode Island’s life science sector.”
He said his budget, which will be released Thursday, will reflect that investment, and he said he looks forward to work on that priority with House Speaker K. Joseph Shekarchi, a Warwick Democrat who has identified that as one of his top goals.
At Shekarchi’s recommendation, the Rhode Island Foundation earlier this year commissioned a market assessment of the state’s biotech life sciences. Among the recommendations from the report was the creation of a quasi-public agency called the Rhode Island Biotech and Life Science hub and a $50 million commitment over several years to strengthen the state’s life sciences sector.
McKee noted that economists expect the economy to struggle in the coming months. “That may or may not be true — but either way, Rhode Island will be ready,” he said. “You’ve heard me say it before — the best way to lessen the impact of an economic downturn is to invest in J-O-B-S, good-paying jobs.”
Urges assault-style weapons ban
McKee noted that Rhode Island enacted three pieces of gun legislation last year that limited magazine capacity to 10 rounds, prohibited the open carry of long guns in public, and raised the age from 18 to 21 to buy long guns and ammunition.
“Our work in this area is not done,” he said. “Let’s follow the lead of other states and send a bill to my desk that bans the sale of assault style weapons. I’m ready to sign that bill into law.”
Highlights the story of Afghan interpreter
Aminullah Faqiry is a front-line Afghan interpreter who worked with the US military and State Department for nearly 12 years, came to Rhode Island with his family after US troops withdrew from Afghanistan in August 2021.
Among those waiting to greet them was Jonathan Dator, a psychologist at Providence College’s personal counseling center who volunteers with No One Left Behind, a nonprofit “dedicated to ensuring that America keeps its promise to our interpreters from Iraq and Afghanistan.”
At the outset of his speech, McKee introduced Faqiry and Dator in the House chamber, saying, “Thanks to Jonathan’s help, Amin and his wife and children were able to flee Afghanistan. They are now here in Rhode Island and part of our community. To Jonathan and Amin, who are both with us here tonight, on behalf of the State of Rhode Island, I want to thank you for being an example of the best of our state.”
Republican response criticizes McKee
Senate Minority Leader Jessica de la Cruz, a North Smithfield Republican, delivered the Republican response to the Democratic governor’s speech, calling for Rhode Island to go even further on tax cuts.
She proposed proposed lowering the sales tax rate from 7 percent to 5 percent. “Let’s have people from Massachusetts shop in Rhode Island for a change,” she said. “Why does RI continue to be so timid and lackadaisical with tax policy?”
Last year, De la Cruz called for temporarily suspending the entire state gas tax, which she said would have saved residents $75 million, and she called McKee’s proposed 3-cent per gallon gas tax relief “too little and too late,” saying, “We have needed bold action, not indecision.”
De la Cruz said the legislature appropriated $250 million dollars for the housing crisis but McKee has produced “no tangible progress.” She said Saal stepped down as housing secretary because “it was clear that he had no plan and no strategy to fix our housing crisis.”
“As President Ronald Reagan’s personnel director famously said, ‘Personnel is policy,’” she said. “We need Cabinet-level directors and secretaries with a proven track record of effectively working with stakeholders and actually following through with a well-executed plan.”
De la Cruz also called for giving Rhode Island families “more choice” in education, saying, “Whether it’s transforming to an all-public charter school district, expanding existing charter schools, or creating Educational Savings Accounts for private school enrollment, there are solutions. They will require creativity, resolve, and the courage to stand up to those who benefit from the status quo.”