State senators voted 30-7 for passage. Chafee is expected to sign the budget into law, and it will take effect Friday, the first day of the new fiscal year.
The new budget will impose a sales tax on the purchase of non-prescription drugs, smartphone applications, software and videogame downloads and sightseeing tours. The proposal also cuts more than $100 million in state spending and increases the monthly premiums paid by some families on Medicaid.
The budget eliminates an estimated deficit of $186 million, most of which was prompted by the end of federal stimulus money. The shortfall had been pegged as high as $331 million until last month, when state finance analysts projected new, higher revenue numbers.
“What I think this budget really does is represent an overall strategy to address this state’s structural and operating deficits, which have existed for a long time,” said Sen. Daniel DaPonte, D-East Providence, chairman of the Senate Finance Committee. “While the cuts in this budget are difficult, they certainly could be a lot worse.”
Highlights of the proposal include:
- A new 7 percent sales tax 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.
- Some $17 million in new spending on public schools, and $4 million in increased funding for state institutions of higher education.
- A provision placing a referendum on the 2012 ballot asking voters to approve table games at the Twin River slot parlor in Lincoln.
In crafting the new spending blueprint, lawmakers ignored many recommendations included in Chafee’s budget proposal. 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.
During floor debate, senators who favored the current budget returned several times to problems with Chafee’s proposal in defending their own.
Still, DaPonte commended the governor “for at least taking on a thorny issue and making some bold recommendations.”
Those who opposed elements of the budget proposed several amendments, but none passed. Had any of them passed, the budget would have been sent back to the House with a looming deadline.
“I can’t justify giving money back to the rich while continually cutting programs for the poor,” said Sen. Harold Metts, D-Providence, who proposed an amendment that, among other things, would have restored social services cut by the plan. “Your bad times are nothing compared to the people of my community, who have it much worse and are suffering.”
The House passed the budget proposal 60-9 Saturday after adding the gambling referendum.
The referendum 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.
Officials in Massachusetts are considering authorizing casinos. Several lawmakers said Rhode Island could lose millions in revenue from Twin River if its customers head to Massachusetts to gamble.
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 will likely recess for the summer later this week. They’ll return to the State House this fall to consider ways to overhaul the state’s public pension system.
Associated Press writer David Klepper contributed to this report.