By Bob Plain, Rhode
Island’s Future
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| CCA Party major donors react to Raimondo "Taylor Swift" tax plan |
EDITOR'S NOTE: About 60% of the funding for the Charlestown Citizens Alliance (CCA Party) comes from non-residents who own vacation homes in Charlestown. Governor Raimondo's proposed budget would whack them hard. GOOD. - WC
Governor Gina Raimondo’s proposed budget would cut funding to
the poor, fully fund the state education aid formula and create new taxes on
high-end second homes and rental properties. You can read her full address to the House and Senate here.
Most significantly, Raimondo seeks to cut about $91 million from
Medicaid, socialized health programs for poor people, and has already appointed
a high profile task force to “reinvent” the program. It costs $2.3 billion a
year, but about half of that is paid for through the federal government.
Raimondo has already identified about $45 million in cuts and her budget
executive summary says the task force is expected to find another $46 million.
But the poor aren’t the only ones who will pay to balance the
budget. So will the state’s beach culture, as she’s proposing a new tax on
million dollar second homes and AirBnB-style rentals.
he proposal calls for what has quickly been dubbed the “Taylor
Swift tax”- a property tax levied on second homes worth more than $1 million.
It will raise $11.8 million in new revenue, according to this briefing.
Finally, the budget would apply sales and local
lodging taxes to unlicensed rentals, which have increasingly become an
alternative to hotels, bed and breakfasts and other licensed lodging.”
Both these taxes will disproportionately affect the touristy
areas of Rhode Island – the islands and South County. But Senate President
Teresa Paiva Weed, of Newport, where untaxed vacation rentals and million
dollar second homes are commonplace, didn’t seem to mind.
“I think it’s a bold and brave look across the spectrum,” Paiva
Weed said. “Just as she is asking for $90 million in Medicaid savings she is
also reaching out to our wealthiest citizens to also assist us in moving
forward.”
Even House Speaker Nick Mattiello, who never met a tax he didn’t
want to cut, gave some early – though conditional – support to the Taylor Swift
tax. “It’s an interesting initiative,” he said. “It seems like something I’d be
inclined to support but right now I want to look at the details of it.”
As did her predecessor, she is fully funding the state education
aid formula – for an overall increase of $34 million from the previous year.
Raimondo also called for statewide all-day kindergarten, and an
end to the school construction moratorium. Through refinancing debt, she
proposes a $20 million “to create a capital fund to help address school
facility needs.”
According to the executive summary, “Lifting the moratorium and
setting the annual construction aid appropriation at $80.0 million starting in
FY 2017 will create fiscal stability with predictable funding and allows for
projects to be prioritized.”
Raimondo would like to see the Earned Income Tax Credit
increased from 10 to 15 percent in one or two years, depending on the early
summer revenue predictions. Massachusetts Earned Income Tax Credit is 15 percent and
Connecticut’s is 27.5 percent.
Her proposed budget would raise an additional $7.1 million by
increase by 25 cents the tax on a pack of cigarettes.
To promote construction, Raimondo proposes, “a package of real
estate tax incentives will encourage construction of job-producing projects,
with a focus on development near transit hubs and historic structures.
The
package includes Rebuild Rhode Island tax credits, tax increment financing, and
partial assistance for local tax stabilization agreements that will make
investing in construction and development in Rhode Island a compelling
proposition,” according to the executive summary.
She’s also proposing what she calls the Anchor Tax Credit. “This
tax credit incentivizes our largest employers —the anchors of our economy — to
attract their suppliers and affiliates to Rhode Island. These employers will
benefit from proximity to their suppliers, while the state gains new jobs and
develops industry clusters,” said the executive summary.
As well as a Job Creation Tax Initiative. “There is strong
support in the General Assembly for a competitive tax
initiative to incentivize employers to create new jobs. The
Governor will work with leaders in the General Assembly to enact a package to
promote job creation in Rhode Island. Any such initiative must include rigorous
accountability provisions and a requirement that the investments’ benefits outweigh
their costs,” the executive summary said.
Bob Plain is the
editor/publisher of Rhode Island's Future. Previously, he's worked as a
reporter for several different news organizations both in Rhode Island and
across the country.