House passes $8.1 billion budget

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The Rhode Island House approved a state budget early Friday that calls for extra spending on schools while authorizing new sales taxes on a pet grooming, taxi fares and pricy clothes.

The $8.1 billion spending plan for the fiscal year beginning July 1 would also raise cigarette taxes and authorize a toll on the Sakonnet River Bridge.

Compared with this year’s budget, the House spending plan would spend more on local schools and restore some funds for services for the developmentally disabled that were cut last year.

The lawmakers who crafted the proposal said better-than-expected revenue projections allowed them to avoid bigger tax hikes or deep spending cuts, but critics of the measure said the budget’s targeted taxes would hurt small businesses. The House passed the legislation 57-15 after 11 hours of debate. It now moves to the Senate.

Under the proposal, the state’s 7 percent sales tax would be imposed on pet grooming, taxi fares and items of clothing or footwear costing $250 or more. Lawmakers voted to remove a proposed tax on car washes, but attempts to eliminate the other taxes failed.

The new taxes would go into effect in October and generate about $10 million annually.

Critics said new taxes weren’t necessary and would hurt small business owners.

“What are we doing? You’re going to tax having my dog groomed?” said Rep. Rene Menard, D-Lincoln. “In a year when we had $100 million surplus we shouldn’t be raising taxes in an $8.1 billion budget.”

Supporters noted the budget contains fewer new taxes than an earlier proposal from Gov. Lincoln Chafee. They said the taxes that were included would help pay for the increased spending on schools and the developmentally disabled.

“I don’t like any tax increase,” said House Majority Leader Nicholas Mattiello, D-Cranston. “But the budget has to balance. You’ve got to pay the bills to do good things.”

A few lawmakers offered amendments that would have raised income taxes on the state’s highest earners, but none succeeded.

Lawmakers from the East Bay mounted a spirited – but unsuccessful – effort to stop the Sakonnet River Bridge toll, saying it would amount to a special tax on residents and businesses in their districts. The amount of the toll hasn’t been set. Officials say it’s unlikely to be implemented before 2014.

“I feel like Moses trying to tell the Pharaoh, ‘let my people go,'” Rep. Dan Gordon, R-Portsmouth, said during the debate. “You have us trapped out on Aquidneck Island … stop holding us hostage.”

House Speaker Gordon Fox replied: “If you’re going to channel Moses, if you can part those seas, we don’t even need the bridges.”

The budget would dedicate $31 million more to local schools than this year’s budget. Some $11 million of the new money would go to underfunded districts around the state. Supporters said it was critical to continue the state’s multi-year effort to boost education aid to local cities and towns.

“We know the municipalities need the help,” said Rep. Frank Ferri, D-Warwick. “Especially the ones that are underfunded. We’re still not there.”

The proposal would also restore nearly $10 million in state and federal funding for services for the developmentally disabled. Lawmakers cut $24 million in state and federal funds for the services last year.

Cigarette taxes would rise by 4 cents to $3.50 per pack under the proposal. Rhode Island has one of the highest tobacco tax rates in the nation; the national average is $1.46 per pack.

House lawmakers voted to ask voters to approve several state building projects next fall, including $94 million in new facilities and renovations at the state veterans’ home, $25 million for affordable housing projects and $50 million to renovate buildings at Rhode Island College.

Lawmakers did not include Chafee’s proposal to raise the state’s 8 percent tax on restaurant meals. The budget also would eliminate a sightseeing tour sales tax approved last year.

The Senate is expected to take up the budget next week. Lawmakers plan to adjourn their annual session shortly after approving a spending plan.

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