Rhode Island news
Education aid faces $8 million cutback
08:28 AM EST on Thursday, February 26, 2004
PROVIDENCE -- State employees, cigarette smokers, public college
students and some low-income families would all pay more under the new
state budget that Governor Carcieri proposed last night.
In his tax-and-spending plan for the year that begins July 1, Carcieri
attempts to plug a potential $192-million hole with tax and fee
increases, program cuts and stepped-up collections.
Highlights include a 75-cent increase in the state's $1.71 cigarette tax
that would make the state's price-per-pack the highest in the nation;
tuition hikes of up to 12 percent at the state colleges; harsher
penalties for welfare slackers and a cut in the number of parents
eligible for child-care subsidies.
The Republican governor also set the stage for a major battle with the
Democrat-controlled legislature over his efforts to freeze some local
aid programs and reduce others, including the state aid that goes out to
public schools across Rhode Island.
"In a nutshell, it's a tough budget . . . A lot of people are going to
be hurt in the budget," said Senate Finance Committee Chairman Stephen
Alves, D-West Warwick.
Among the governor's stated goals: no sales or income tax increase,
abandoning "ineffective tax credits," requiring state employees to begin
sharing the cost of health-care premiums, paying human service benefits
"only to [those] eligible," and finding "ways to spend less to achieve
the same result."
"Eliminating this deficit in this budget has been extraordinarily,
extraordinarily difficult," Carcieri said in a speech to lawmakers last
night. "It has necessitated cuts that we have not had to face for many
years."
But, "the sobering reality to this budget is that we cannot close this
deficit without cutting spending across all of state government."
Responded Senate President Joseph A. Montalbano, D-North Providence: "I
don't think we are going to agree with cutting aid to cities and towns,
cutting school aid."
While he, too, stopped short of declaring any of Carcieri's proposals
dead-on-arrival, House Speaker William J. Murphy, D-West Warwick, said:
"I know by the time I get upstairs in about five minutes my phone will
be ringing" with local officials pleading "Please give us help, we're
choking."
Angry mayors from Providence, North Providence and Warwick started the
outcry minutes later at a news conference.
"It's very clear to me this governor has set the wrong priorities with
this budget," said Providence Mayor David N. Cicilline, who focused his
criticism on the school aid figure. "Either we make the investments now
or we make the investments later in additional costs at the Training
School and prisons."
North Providence Mayor A. Ralph Mollis said the budget, if enacted,
"will create an educational funding crisis and a property tax increase
crisis" for cities and towns.
The governor's proposal calls for $5.946 billion in state and federal
spending during fiscal 2005, up 3.6 percent from the adopted budget for
this year. State general-revenue spending alone would rise to $2.899
billion, up 4.1 percent.
"We cannot stop this problem, in my judgment, by raising taxes -- we've
got to stop doing that. We've got to learn to live within our means,"
Carcieri said. "Our citizens are under financial pressure themselves. I
believe we cannot ask them to pay more."
Carcieri is nonetheless banking on $168.9 million in new revenue over
and above what the state's current taxes and fees would produce. In some
cases, he is simply proposing to shuffle money from one pot to another
or give delinquent taxpayers a new incentive -- possible loss of their
driver's licenses -- to pay up.
But he is also proposing at least $54.6 million in new and higher taxes
and fees, at the same time he is seeking to repeal $4.5 million worth of
tax credits adopted, in recent years, by lawmakers to spur development
in hometown "enterprise zones." Carcieri said they weren't
cost-effective.
AS ALWAYS, the governor's budget proposal is a starting point for
debate. It is also a political statement that reflects the Republican's
own priorities in his second year in office. The vast majority of the
spending package -- including overhead, welfare entitlements and
locked-in employee benefits -- will be accepted without change.
But some of his priorities came at the expense of others -- such as the
local aid programs -- that are dear to lawmakers' hearts every year, and
especially so in an election year.
Carcieri wants to freeze a passel of local aid programs, from "revenue
sharing" to "payments-in-lieu of taxes (PILOT)" for communities with
tax-exempt colleges, hospitals and state-owned properties.
Carcieri also assured a pitched battle over school aid by proposing a
$5.4-million increase in aid for the publicly financed, but privately
run "charter schools" at the same time as a $7.9-million cut in
operating aid for other public schools.
Rep. Paul W. Crowley, who chairs the House Finance Committee's
subcommittee on education, said the proposal sets up a fight "that we
were trying to avoid."
"Even as difficult as the challenges in this budget are, to not be able
to find $8 million to at least level-fund education is a big
disappointment, one I don't think the Assembly will accept" said
Crowley, D-Newport.
State Education Commissioner Peter McWalters said the proposal marks the
first time in a decade a governor has attempted to cut "operations aid"
for districts.
"How does the governor expect that public schools in Rhode Island are
going to meet all the federal mandates and provide programs for all
children . . . [if] he is going to cut money to education?" asked Larry
Purtill, president of the Rhode Island chapter of the National Education
Association.
Municipalities would benefit from a freezing of the trash-tipping fee at
the Central Landfill, saving them $2.7 million, but would see another
looming aid reduction in Carcieri's proposal to eliminate the new 1
percent meals tax in July 2005.
Parts of what Carcieri proposed have been tried before and summarily
rejected, such as his attempt to reduce or strike $6.2 million in
"legislative grants" that lawmakers tucked away in state agencies for
their hometown senior centers and assorted pet projects, such as the
Rhode Island Yachting Center and former Providence Rep. George Castro's
coaching business for "Blacks Interested in Communications." Another
$18.1 million in grants would remain.
Carcieri is also again hoping to convince lawmakers to stop giving the
owners of the dogs that race at Lincoln Park a share of proceeds from
Lottery-sponsored video slots, projected as $10.5 million in the coming
year.
OTHER PROPOSALS are new; some already controversial.
His budget assumes, for example, tuition and fee increases of 11.5
percent at the University of Rhode Island; 9.7 percent at Rhode Island
College; and 12 percent at the Community College of Rhode Island. For
in-state students, that would raise tuition costs anywhere from $255 to
$712 a year.
Carcieri will no doubt be cheered for proposing to spend another $5
million on "affordable housing" and contribute more to complete
construction of a new Travelers Aid facility for the homeless.
But welfare families, along with those the governor describes as "the
working poor," would feel the pinch of other proposals.
For example, the governor wants to remove an estimated 837 families from
the welfare rolls by adopting the sanctions that 17 other states --
including Massachusetts, Connecticut and New Hampshire -- impose against
people who do not stick to their welfare-to-work plans.
Current law allows the state to reduce the benefits paid to families of
uncooperative parents, in stages, over four years. Carcieri wants to cut
them off after 12 months, to save an estimated $3.9 million to $4.1
million.
He is also seeking to curb the rapidly rising cost of providing
subsidized child care to families where the parents may be struggling,
but ineligible or no longer eligible for traditional welfare.
For starters, Carcieri is proposing to reduce the income ceiling for
child-care subsidies for a single mother with two children from $35,258
to $31,340 a year. The state would save an estimated $3.9 million, but
925 children would no longer qualify for help.
Carcieri also wants higher-earning parents of enrolled children to pay
$9 to $11 more each week per family, on average, depending on their
income. Estimates are this would raise an additonal $699,000 for the
state, at the expense of the parents of 3,488 children.
Even with these curbs, the state expects to have 13,290 children
enrolled next year in a subsidy program that has grown, in cost, from
$31.7 million in 1999 to a projected $86.9 million next year.
Carcieri is also proposing a number of changes for children under the
care of the Department of Children, Youth and Families, including
limiting psychiatric hospital stays to 30 days, with plans to transition
patients to "step-down" beds in group homes still being created.
Low-income seniors eligible for prescription-drug help under the state's
RIPAE program would have the opportunity to order their drugs by mail
through the existing state benefits provider, saving the state an
estimated $387,463.
The governor also wants some RIPAE customers to use a soon-to-be
available Medicare prescription-drug discount card to purchase their
first $600 of medications, to save the state $1.45 million. The card is
only available to seniors who make less than $12,123 annually or couples
whose income is less than $16,362. The state estimates 7,500 seniors out
of about 35,000 RIPAE participants would be eligible.
Nursing-home payments would go up from $290 million to a projected $303
million. But nursing-home owners -- and their champions in the
legislature -- will probably be unhappy with the governor's attempt to
postpone, for a year, a step in the new reimbursement schedule the
General Assembly approved just last year that would cost the state an
additional $4 million.
The state is also proposing to increase licensing fees for assisted
living and nursing facilities to raise $690,430.
Smokers would see the state cigarette tax rise another 75 cents a pack,
driving the cost of an average brand-name pack of cigarettes to $6.10,
the highest in the nation. The cost of the same pack of cigarettes in
Massachusetts is 37 cents lower, at $5.73; Connecticut's price-per-pack
is $5.22 now, although an increase is under consideration.
The change is estimated to raise $40.3 million. State officials say the
tax hike may also have a public health benefit: a potential 10-percent
drop in cigarette consumption.
"I'm not sure that's enough to drive a large majority of business over
the border," said state budget analyst Paul Dion of the differences.
But Alves, the Senate finance chairman, doubted the cigarette tax hike
would pass as proposed. 'What are we going to do to all our borderline
stores? We're going to kill them," he said.
THE GOVERNOR is also proposing a new 26-cent-a-month tax on
cellular-telephone service, to generate $1.6 million. The money from
about 600,000 phone customers would go to the E-911 system for
improvements, including technology to allow rescuers in more communities
to locate a cell-phone caller who dials 911.
Carcieri also has a plan for getting an estimated $6.5 million from
delinquent taxpayers.
Starting next January, the state would begin checking people applying to
get or renew a professional license, driver's license or car
registration against a list of tax scofflaws. Those who owe money would
have to pay up or strike a payment plan with the state.
Likewise, the state would check to ensure someone seeking to renew a
driver's license or car registration does not owe fines, fees or other
court costs, and the state would be authorized to deduct any traffic or
municipal court fines owed from a person's income-tax refund. Those
changes are estimated to increase court collections by $4 million.
In a year when the governor and Assembly are battling over how to
address ethics issues swirling around state government, Carcieri would
essentially level-fund the state Ethics Commission, while adding another
$200,000, for a total of $300,000, for his proposed "select commission
on public integrity."
As previously announced, Carcieri is proposing a 2-percent salary
increase for state workers, but also asking that they begin paying a
share of their health-insurance premiums, starting at 7 percent in July
and rising to 15 percent in three years. In the first year, the cost
would be an estimated $293.40 for individuals or $822.52 for those with
a family plan. Legislative leaders said they might be open to a "sliding
scale."
The raise would cost the state $11.9 million, offset by $6 million in
health-care contributions.
Most union contracts expire at the end of June, and the changes for them
would have to be negotiated. Union leaders have publicly stated they
oppose premium-sharing.
Even with the proposed tradeoffs, Carcieri's budget advisers see salary
and benefit costs rising from $1.207 billion to $1.250 billion next year.
One big contributing factor to the spurt in payroll costs is a
19.7-percent spike in state contributions to the state employees pension
fund, which financial advisers told the state would be necessary to keep
up with spiraling costs. This hike will raise the taxpayer tab for these
pensions from $79.9 million this year to a projected $95.6 million next
year.
An administration budget summary boasts: "State Workforce leaner -- with
no layoffs." In actuality, the budget would raise the hiring ceiling
from 15,289.4 to 15,397, not including some college positions. The new
workers include state police troopers, correctional officers and staff
for expansions at CCRI.
DIGITAL EXTRA:Check later today to view the full text of the governor's
budget proposal for 2005 at:
