RI: House Budget Would Kill Governor’s Plan To Expand Marijuana Dispensaries

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Among the highlights of the proposed 2018-19 budget, approved by the House Finance Committee by a 15-3 vote:

— Lawmakers provided cities and towns with enough money — a total of $54.7 million — to cut their local car taxes for the second year in a row.

— They paved the way for the introduction of wagering on college and pro sports at Twin River’s state-operated casinos in Lincoln and Tiverton.

— They killed Democrat Raimondo’s attempt to expand Rhode Island’s medical-marijuana market from three authorized dispensaries to 15, while allowing them to sell to medical-marijuana card holders from out of state.

— The reworked bill would give voters a chance in November to approve borrowing $250 million for school construction.

With more revenue than Raimondo saw on the horizon when she proposed her tax-and-spending plan in early winter, they also rejected her proposed cigarette tax hike and new co-pays for Medicaid enrollees, reversed a proposed $15.7-million cut in hospital funding, restored $18 million in services for people with developmental disabilities, and managed to find enough money to pay the retroactive election-year wage hikes Raimondo gave state workers at a projected cost of $10.8 million this year and $35.4 million in the year that starts July 1.

“With the increased resources, there was consensus among our members for human [services] restoration, so we applied more resource to hospitals, home care workers and the developmentally disabled,” Mattielo told reporters at a budget briefing.

The new budget would spend $221 million more than Raimondo’s $9.3 billion budget proposal in January.

The lawmakers’ newly unveiled budget bill now heads to a vote by the full House next Friday.

Sports gambling, which Raimondo proposed in January in anticipation of a U.S. Supreme Court ruling that came through in May, is expected to generate $23.5 million in new revenue for the state. Mattiello told reporters the new budget books that revenue, but requires General Assembly approval of whatever deal the Raimondo administration strikes with Twin River and a company to manage the sports book. IGT submitted the sole bid to do so earlier in the year.

Raimondo also proposed the introduction of so-called “stadium gaming,” which involves multiple players competing in front of large video screens, at Twin River’s casinos, bringing the state an additional $4.1 million in revenue. Twin River spokeswoman Patti Doyle confirmed Friday: “We are proceeding with the development of the stadium gaming product — which involves a live dealer — and currently have a planned launch date of Sept. 1, 2018.”

Sports leagues’ request for a share of betting revenue, which they’ve called an “integrity fee,” was denied.

Backed by Raimondo, General Treasurer Seth Magaziner and labor groups, the $250-million school bond language fashioned by House leaders includes new rules meant to encourage communities to maintain their buildings, Mattiello said.

As expected, the proposed new budget keeps Mattiello’s promise last year to continue phasing out the car tax.

The budget bill would provide cities and towns $54.7 million in reimbursements next year for lost local revenue resulting from the legislature’s decision to give vehicle owners a break. The budget effectively increases the exemption from $1,000 in vehicle value this year to $2,000 next year.

Moving into the second year of the phase-out, the budget also caps the potential motor-vehicle tax rates a community can charge at $50 per $1,000 of value, and exempts cars 15 years and older.

Faced with more than $200 million in projected red ink when the year began, Raimondo proposed to attack it with a combination of social-service spending cuts, one-time transfers, an expansion of the sales tax, new and higher fees, more aggressive tax collections and marijuana sales, in addition to sports gambling.

By last month, buoyant tax collections had injected an additional $135 million into the state’s balance sheet, allowing lawmakers to restore funding to some popular programs and kill some of the governor’s more controversial proposals.

The reworked budget extinguishes a proposed 25-cent hike in the cigarette tax, to $4.50 per pack, that threatened to give Rhode Island the highest cigarette tax in the country.

While the budget does not add new medical marijuana dispensaries to compete with the three existing retailers, it raises the licensing fee those three dispensaries pay, from $5,000 a year to $250,000 a year.

And medical marijuana cardholders from Massachusetts and Connecticut would be able to buy from Rhode Island dispensaries.

It includes Raimondo’s plan to extend the sales tax to armored car services and “software as a service” products such as GoToMeeting, Office365 or SalesForce.com. The armored car tax was expected to bring in $9.7 million and software tax $4.4 million.

The budget maintains Raimondo’s most recent projections — $4 million this year and $41 million in the budget year that starts July 1 — for revenue from truck tolls expected to begin charging next week.

Roughly a week before the budget was expected to be rolled out, a snag in Rhode Island’s high-stakes legal fight with dozens of nursing homes exposed the state to a potential $24 million in retroactive and future Medicaid payments.

Mattiello told reporters the budget will reduce scheduled rate increases for nursing homes in the year ahead to offset any total revenue gains the nursing homes might receive from the lawsuit.

The budget reverses all but $4 million of the $18.6 million in budget “scoops” Raimondo proposed from quasi-state agencies Rhode Island Housing, Rhode Island Student Loan Authority, Rhode Island Resource Recovery Corporation and the Rhode Island Turnpike and Bridge Authority. The $4 million will come from the R.I. Infrastructure Bank, Mattiello said.

Amid the changes, lawmakers kept most of Raimondo’s top priorities, including making several economic development incentives that were set to expire at the end of the year permanent.

These include the tools Raimondo has used to lure corporate offices from other states, such as the Rebuild Rhode Island tax credits for large construction projects, the Wavemaker Fellowship to encourage technology graduates to settle here, and state Tax Increment Financing featured in Mattiello’s PawSox ballpark financing plan. Raimondo had requested $21.4 million from these programs.

The budget maintained the Real Jobs Rhode Island workforce training program, but will need to find a new funding source for it a year from now, Mattiello said.

After months of Republican complaints about E911 telephone fees being diverted to the state coffers, the budget includes $1 million for 911 staffing and planning for the next generation of emergency communications. It would also rename the fee as a public safety fee instead of 911 fee.

The three nay votes were cast by Republicans Patricia Morgan, Anthony Giarrusso and Robert Quattrocchi. Their shared complaint: “They were not given copies of the massive budget bill in time to read any of it before the vote.

Asked why she voted no, Morgan, who is seeking the GOP nod to run for governor, said, “First of all, I haven’t had a chance to actually read the budget and understand what is in it, … but secondly, because it is now $9.559 billion, which means that we had a windfall this year and we spent it all … [instead of] containing our spending.”

Giarrusso said, “One good thing is there is not a lot of extra fees and taxes and stuff,” but “this was rapid-fire. We went through $9.5 billion in about 40 minutes. … I just think we could have had a little more time.”

Holding the budget bill up to make his point, Quattrocchi said, “If you have a tape measure, I’d like to measure the thickness of this.

“On behalf of my constituents, I would really like to have an opportunity to read through what’s in here,” he said.