R.I. House passes $14 billion state budget – The Boston Globe

Representative George A. Nardone, a Coventry Republican, proposed an amendment that would create an inspector general’s office within the lieutenant governor’s office.

Republicans have been pushing for years to create an inspector general’s office to investigate waste, fraud and abuse, but the idea has gone nowhere. This year, GOP lawmakers linked the idea to outrage over the closure of the westbound lanes of the Washington Bridge.

Minority Leader Michael W. Chippendale, a Foster Republican, said 23 states, the military, and the federal government have inspector general offices, and every $1 invested in those federal offices saves $21. “If anyone can point me to an investment with a 2100 percent return, throw it at me, as long as it’s legal,” he said.

Representative Evan P. Shanley, a Warwick Democrat, said the concept of an inspector general is “excellent,” but he said that proposal should be decided as part of a state constitutional convention. “I don’t think this is the right vehicle for it,” he said.

And House Floor Manager John G. “Jay” Edwards, a Tiverton Democrat, said it doesn’t make sense to put an independent inspector general inside the lieutenant governor’s office since that’s an “elected partisan office” with a $1.4 million budget and just eight employees. “This is not the mechanism to create the office of inspector general,” he said.

The amendment failed by a vote of 11 to 61.

Film tax credits defended

Representative Patricia A. Morgan, a West Warwick Republican running for the US Senate, proposed an amendment that would eliminate $20 million in motion picture tax credits and use that money to eliminate the the gross earnings tax on electric bills.

Morgan said it’s nice to see films made in Rhode Island, but she said the tax credit program has not created a movie industry in the state. And she said, “What we do have is a lot of constituents, small businesses, and large business being hammered with high electric rates.”

But Representative Jon D. Brien, a Woonsocket independent, said films such as “Hachi: A Dog’s Tale,” and episodes of the “The Brotherhood” series were filmed in Woonsocket, and it provided a boost to the city’s economy.

“The film industry will go elsewhere,” he warned. “Other cities and towns and states will do it. Let’s incentivize the movie industry here in Rhode Island and have movies filmed in our cities and towns.”

That amendment failed by a vote of 6 to 61.

Housing bond changed and approved

The budget includes a record $120 million housing bond that will be placed before voters in November. On Friday night, the House passed a floor amendment that would double the amount dedicated to “home ownership” from $10 million to $20 million while cutting the amount for “affordable housing” from $90 million to $80 million.

House Speaker K. Joseph Shekarchi, a Warwick Democrat, said that proposal came from Governor Daniel J. McKee’s office.

Shekarchi said housing is needed at every level, including market-rate housing, workforce housing, and affordable housing. “So in this budget and in this bond, there’s enough money for all of those things,” he said. “But I don’t think there’s any one magic bullet that solves it all.”

Representative Enrique Sanchez, a Providence Democrat, said a $120 million investment in housing “seems a little bit inadequate” in the context of a $14 billion budget. He said backs the budget overall, calling it “one of the most progressive budgets I have ever seen.” But he said the housing crisis calls for an investment of anywhere from $300 million to $1 billion.

Cost-of-living increases hailed

Legislators praised the budget for providing cost-of-living increases to pensioners who retired before 2012 rather than waiting until the retirement system is 80 percent funded. The budget would allow other pensioners to get COLAs once the system is 75 percent funded. And it would allow for calculating pension benefits based on the average of the highest three years of compensation rather than five years.

Representative Charlene M. Lima, a Cranston Democrat, noted she has been an outspoken critic of the 2011 pension overhaul championed by former state treasurer and governor Gina M. Raimondo, who is now the US commerce secretary. And she praised Shekarchi for including the cost-of-living increases in this year’s budget despite “substantial and unexpected burdens” such as replacing the Washington Bridge.

“Until today, we have not seen any substantial effort to begin to correct this injustice,” Lima said. “We will continue to do more to get more retirees their just desserts next session until all retirees are made whole.”

General Treasurer James A. Diossa has warned that those pension changes would increase the unfunded pension liability by $417 million and “could potentially have an impact on the state’s bond rating in the future.”

Medicaid reimbursements

Legislators noted the budget added $44 million to increase Medicaid reimbursement rates right away rather than phasing those increases in over three years, as proposed by McKee. Legislators said that would make a big difference for the state’s medical, clinical, social, and human service providers.

“We recognize a budget is a moral document and it is one that lays out an institution’s priorities,” said Representative David Morales, a Providence Democrat. “We have a budget that has made some the most significant increases in Medicaid reimbursement rates that this state has seen in decades — specifically for early intervention, home care services, adults being able to access a dentist. That has tangible effects on day-to-day lives of some of our most vulnerable.”

But Nardone said those reimbursement rate increases would not help Rhode Island address a shortage of primary care providers. “This has to be addressed,” he said.

RIPTA funding

The budget also boosted funding by $5 million for the Rhode Island Public Transit Authority, helping the bus agency avoid previously proposed service cuts.

“We ensured there was funding so our public transportation system remained stable,” Morales said. “We heard directly from the agency (Thursday) that they were not going to move forward with any service cuts in the summer.”

Impact on businesses

While praising some aspects of the budget, Nardone said “as whole it does not do enough for the business community.” He the “most egregious” example was the decision to continue charging a $50 corporate minimum tax even though McKee had proposed eliminating it. “That is a flat tax paid by small businesses,” he said. “You pay it if you make money, you pay it if you lose money.”

Education funding

Providence, the largest school district which is now under a state takeover, had been slated to get a $300,000 cut to its $282 million in state aid under McKee’s proposal. But the House budget boosts aid to Providence increases by $11.7 million.

“(Providence Public School District) cannot hide behind the excuse of having insufficient funding in order to ensure that our schools are well staffed,” Morales said. So now he expects “we are going to reverse the layoffs of dozens of public school teachers, we are going to reverse the layoffs of social workers because that has had an impact on the morale of our students.”

The state Senate will take up the budget next week as the legislature enters what is expected to be its final week.

Edward Fitzpatrick can be reached at edward.fitzpatrick@globe.com. Follow him @FitzProv.