Response to Governor Chafee’s Proposed Budget for Fiscal Year 2014

The Governor’s proposed budget outlines several important policy priorities for the coming year. It includes new investments in many of the areas that are critically important to moving our economy forward, including infrastructure, education and workforce development.

Unfortunately, the proposal fails to make meaningful improvements and investments in programs that address the needs of lower-income Rhode Islanders including housing, child care, and cash assistance for families that fall on hard times. Furthermore, the budget proposes to reduce the corporate income tax rate which will cause our state to lose millions of dollars in the coming fiscal year and future years.

As the General Assembly considers the proposed budget we will work to ensure that there is no revenue lost due to tax cuts. We will collaborate with our community partners to advocate for policies and investments to help working families access quality child care, provide opportunities for low-skilled parents to enter the job market and address the immediate needs of homeless Rhode Islanders.

Workforce Development

The Governor’s budget includes $3 million ($1 million for the current year and $2 million for FY 2014) for a new Work Immersion Program and a non-trade apprenticeship program. The Work Immersion program provides a state match for businesses that hire unemployed adults or college students for a 10 week work experience period and an additional subsidy if the program participant is hired. With this proposal, the Governor wisely opens the door to state funding for workforce development, an investment that has been sorely lacking. As the conveners of the Rhode Island Workforce Alliance, we will advocate for a larger investment to advance the strategies outlined in the Governor’s Workforce Board’s (GWB) Biennial Employment and Training Plan. In addition, we will work to ensure that unemployed parents have access to child care assistance so that they can participate in the various job-readiness and unpaid job programs supported by the GWB and member agencies.

Tax policy

The Governor’s proposal to reduce the corporate tax rate, designed to improve the state’s business climate, may be well intentioned, but the state cannot t afford to lose so much revenue when there are so many pressing needs. Even with the proposed changes to the Jobs Development Act and Enterprise Zone tax credits to offset the change in the rate, our state will lose an increasing amount of money, reaching $20 million in 2016. We will work with the General Assembly to ensure that any changes to the corporate tax rate are revenue neutral by revising the proposed rate reduction and/or reforming or eliminating other tax expenditures.

If policymakers choose to embrace the Governor’s proposal to revive the historic tax credit by using abandoned credits, it must be done carefully. Projects that provide the most benefit to the community should be targeted, anticipated outcomes must be clearly stated, and job quality standards must be met.

Health care

We are pleased that the budget takes advantage of federal health care reform to expand health coverage to more Rhode Islanders. Approximately 14,000 low-income single adults (with income less than around $15,000) will be eligible for Medicaid beginning in January 2014, with the full cost paid by the federal government. The budget also keeps health care affordable for families by maintaining parent eligibility for RIte Care health insurance.
Low-income Rhode Islanders

While many important investments are proposed, there is little in the budget to address the needs of families who are struggling in our state. With our community partners we will advocate for funding for affordable housing, improving the child care assistance program so that working parents can earn a little more and retain their subsidy and addressing the immediate needs of homeless Rhode Islanders.

Finally, the budget includes new strategies and a pilot program aimed at helping low-skilled, very poor parents enrolled in RI Works get jobs, but the details are not yet available. Unfortunately, the budget does not address two structural problems with the program that impede these parents from achieving successful employment outcomes: the 24 month time limit and the 6 month cap on the program that helps parents with limited literacy and/or English language skills prepare for the job market.

For more information about how the state budget is developed, and how advocates can influence the debate, visit the Budget Toolbox section of our website.