PROVIDENCE — After taking nearly a week to decide, Governor Gina M. Raimondo on Friday reluctantly signed the $10 billion state budget, warning that it “unwisely takes our foot off the gas at a critical point in our comeback.”
Raimondo, a Democrat starting her second term, has signed each of the five budgets she has been presented with since taking office, but this year’s delay prompted speculation that she might issue her first budget veto or let it become law this weekend without her signature.
In a letter transmitting the fiscal year 2020 budget to the House of Representatives, Raimondo praised progress on her priorities, including pre-kindergarten programs and increased funding to support students learning English. The budget adds 300 more pre-K seats to the 1,080 already funded, and doubles funding for English language learner programs to $5 million.
But she underscored sharp differences with legislative leaders.
“The General Assembly’s budget restricts our ability to grow the economy and unwisely takes our foot off the gas at a critical point in our comeback,” Raimondo said. “By cutting our innovative and effective new economic development tools, our progress is put at risk.”
The governor criticized “shortsighted changes” to the Real Jobs Rhode Island job training program and the Qualified Jobs program, and she blasted a new “Small Business Development Fund” that taps $42 million in state tax credits.
“Instead of bolstering these proven initiatives, the General Assembly’s budget creates a new controversial tax incentive program benefiting wealthy out-of-state investors that could put $42 million of taxpayer money at risk and increase our structural deficit,” she said. “I am concerned it returns us to the old way of doing things.”
House Speaker Nicholas A. Mattiello, a Cranston Democrat, and Senate President Dominick J. Ruggerio, a North Providence Democrat, issued a joint statement defending the budget and calling into question the governor’s economic development and tax strategies.
“The budget is responsive to concerns that the economic development policies of the last four years have not done enough to help home-grown small businesses,” the legislative leaders said.
They noted the budget fully funds Mattiello’s priority of phasing out the car tax, saying that was “something the Governor attempted to slow down.” And they said the budget “spares Rhode Island businesses the costly new taxes the Governor had sought to impose.”
The budget funds the third year of a six-year car tax phaseout that will be completed in 2023. The budgets adds a new “Netflix” tax on digital downloads and streaming, but it eliminates a “tampon tax” on feminine hygiene products.
Raimondo also took issue with a budget article that lets the state controller halt payments for state agencies on pace to overspend their budgets — with exceptions made for “immediate health and safety reasons.” The flash point is the beleaguered Department of Children, Youth and Families — the subject of a scathing report about the death of a special-needs child in January.
“This budget places unprecedented restrictions on the ability of the executive branch to account for unforeseen increases in the number of children and families we serve as part of our legal and moral obligation to care for vulnerable Rhode Islanders,” Raimondo said.
House spokesman Larry Berman said DCYF requested $236.6 million but Raimondo only budgeted $228.6 million. “The General Assembly gave the governor exactly what she asked for in the DCYF budget,” he said.
The legislature needs to impose greater accountability on Raimondo’s administration “to curb overspending and encourage fiscal discipline while being responsive to health and safety concerns,” Mattiello and Ruggerio said. “Given recent management failures, it’s not surprising that these important measures would be met with such resistance from the Governor.”
Raimondo bemoaned the lack of a line-item veto — an issue that gained renewed attention amid controversy over $1 million budgeted for a Cranston chiropractor’s alternative brain therapy program. Mattiello ended up removing the funding.
“We are one of only six states that lack a line-item veto — a critical tool for ensuring transparency and accountability,” the governor said. “It has the support of a solid majority of Rhode Islanders, and I look forward to working with the General Assembly to put it on next year’s ballot.”
Berman said that if the governor had line-item veto power, she would have removed the provision aimed at curtailing administration overspending, which has been a significant concern for rank-and-file legislators.
Raimondo signed the budget two days after Moody’s Investor Service placed Rhode Island on a list of seven states that were beginning the fiscal year on July 1 without a newly enacted budget in place — which the credit-rating agency called “a sign of governance weakness.”
Brown University political science Professor Wendy Schiller said vetoing the budget would not have been a good option for the governor.
“First of all, she wants Rhode Island to look to the outside world like it’s running well,” Schiller said. Also, the governor had to acknowledge that progressives just won a victory in passing an abortion rights law, which Mattiello and Ruggerio opposed but allowed to come to final votes, she said.
“At the end of the day, Raimondo is, if nothing else, a pragmatist,” Schiller said.