The spending plan, which now moves to the Senate, would eliminate an estimated $186 million budget deficit through a mix of spending cuts, limited tax increases and an increase in monthly premiums paid by some families on Medicaid.
The House passed the legislation by a vote of 60-9 just before 2 a.m. Saturday following 10 hours of debate. Leaders of the House’s Democratic majority said they tried to limit tax increases, protect investments in education and look for spending cuts that didn’t devastate state services.
Highlights of the proposal included:
-A new 7 percent sales taxes on the purchase of non-prescription drugs, software and videogame downloads, smartphone applications and sightseeing tours. The new taxes would go into effect Oct. 1 and would raise an estimated $17 million in the next fiscal year.
-Increased monthly premiums for families on Medicaid whose income places them above the poverty line. A family of four living on an income of $33,000 would see their monthly Medicaid premium rise from $61 to $91.
-Efforts to curb spending in future years, including a three-year halt to new school construction projects, and the end of automatic pay increases for state workers based on years of service.
The budget proposal contains many changes from the original plan introduced by Gov. Lincoln Chafee in March. Chafee, an independent, wanted to reduce the state sales tax from 7 to 6 percent but impose it on a long list of currently untaxed items, including non-prescription drugs but also dry cleaning, taxi fares, movie tickets and haircuts.
Chafee’s proposal would also have reduced business taxes and required state workers to contribute more toward their pensions.
The legislative proposal relies more on spending cuts than tax increases to balance the budget. Still, several lawmakers criticized the modest expansion of the sales tax. Some said the so-called “aspirin tax” would be a burden on low-income families and seniors on fixed incomes who rely on over-the-counter drugs.
Others predicted the proposed sightseeing tour tax would harm tourism.
“We’re really going to tax children going to see Santa Claus?” she asked. “Where do we draw the line? Do we really want to be known as the state that’s going to do that?”
But Rep. Helio Melo, D-East Providence, said sightseeing and the other items to be taxed were singled out because they are already subject to taxes in neighboring states. He noted that most people taking sightseeing tours in Rhode Island are out-of-state tourists.
“It’s not like we’re going after Rhode Island residents,” he said.
House members offered dozens of amendments to tweak the proposal. Failed amendments included calls to raise taxes on high-income residents, increase funding for affordable housing for the homeless and close tax loopholes allowing big companies to reduce their state taxes.
One notable amendment that passed would ask voters to approve table games like poker, blackjack and roulette at the Twin River slot parlor. The referendum would go before voters in the 2012 election.
“We’re going to face competition from the north very shortly,” Mattiello said. “It’s very important that we get the table games online as soon as possible so we’re actually competitive.”
The General Assembly was already considering legislation to place the question on the ballot. A study commissioned by the facility’s owners suggests the state could create 650 jobs and generate $60 million in additional government revenue.
Lawmakers hope to recess for the summer next week. They’ll return to the Statehouse in the fall to consider ways to reform the state’s public pension system