The state budget for next fiscal year, which will begin July 1, will likely not be passed for some time yet, however cities and towns in Rhode Island are already sharpening pencils preparing for possible repercussions coming as a result of the proposed language included.
“We’ll be focusing a lot on the governor’s budget,” said Brian Daniels, executive director for the Rhode Island League of Cities and Towns, during a break between sessions at the organization’s 19th annual convention held at the Crowne Plaza on Jan. 24.
First priority issue off the top of his head, Daniels mentioned the proposal to legalize marijuana for recreational purposes, a measure that Governor Gina Raimondo hopes will raise $6.5 million between July 2019-20 and $21.9 million between July 2020-21.
“The marijuana legalization proposal is over 100 pages of legislative text, there’s a lot of impact on cities and towns,” Daniels said. “We’ve done a cursory review. I think we’re going to have some recommendations about more local control and more local input as to how these decisions get made.”
Of particular concern to Daniels and the League is the ability for cities and towns to dictate whether or not they want to allow recreational marijuana facilities in their municipality. The proposal from the state calls for only six new, retail-only “compassion centers” that, combined with the three medical marijuana facilities existing in the state – including one in Warwick – would make for nine overall facilities selling marijuana in Rhode Island.
However, Daniels said that his impression of the proposed legalization legislation gives communities a short time window in order to enact moratoriums if they wish to prevent recreational facilities from opening up in their cities or towns.
“The communities essentially have to make their decisions by November of 2019,” he said. “My reading is that is their one shot at doing it and it’s not an election year, so people would have to pay for a special election. That’s going to be a challenge.”
Still, Daniels said that he was thankful the proposal enables communities to prevent facilities from operating within their boundaries if they choose to do so, despite the accelerated timeline making it more difficult than would be ideal.
“That’s something we care about and it’s something Massachusetts has done, to make sure communities have the ability to choose what goes on in their communities,” Daniels said. “We’re going to have to work out the details with the legislature as this proceeds.”
Elsewhere in the budget, Daniels and the League expressed disappointment at the loss of about $5.3 million in PILOT money from the state. The state payments went to compensate municipalities for property tax dollars that go uncollected from businesses operating within the properties of nonprofit entities such as universities and nonprofit hospitals.
Daniels agreed that the state wasn’t overly clear in terms of how they came up with the figure deemed appropriate to cut, and pondered if communities would be able to recoup money lost even if a legislative measure is enacted to allow municipalities to tax these ventures – which is what the budget proposal calls for.
“They’re trying to figure out what are these properties,” Daniels said. “It’s not as if all of these colleges and universities and hospitals are going to hand out a list of their for-profit properties. So, assessors have to get involved, they have to go find out what those are and figure out if there is an existing tax agreement. Some institutions do voluntary PILOT payments. That’s also a pretty heavy lift for cities and towns.”
Providence and Cranston will be hit hardest by the loss of PILOT funding (around $4.1 million and $630,000 respectively), but Warwick will also lose about $170,000 in revenue from the state that will have to be found elsewhere, as it isn’t known at this time how many so-called “non-mission”, for-profit businesses are operating without paying property tax in the city.
“We have no idea if the amount that can be raised locally offsets the projected cuts the governor has proposed,” Daniels said. “That’s something we’re still determining and that’s going to take some time, because our communities don’t have a list.”
In regards to education, Daniels was happy to see $30 million being added to the funding formula for school aid, but was unsure about how much of that would be going to local public schools versus charter schools. He said that recently released RICAS scores highlighted a need for further investment into education in the state.
“That is a huge driver for our communities,” he said. “Property taxes and property values are tied to how good a school is. People will pay more to be in a good school district, so we need to make sure that we’re providing the best possible education and people are getting the best value for their property tax dollars.”
Also in the proposal was a $290,000 investment to prevent childhood hunger, which included a provision that would mandate school districts to provide free breakfast and serve federally subsidized meals to eligible students.
“Some communities are not doing that now and there will be additional costs,” Daniels said, who said he had been on a conference call with community leaders discussing the issue. He said there would be a waiver provision in the budget that could allow communities displaying a financial hardship to forego the requirement.
Finally, the car tax proponent of the budget – which would recalibrate how the state pays down the balance necessary for the phase out – was also on the League’s radar as well. The budget proposal calls for a smaller pay-down on the phase out in the next fiscal year, resulting in over $21 million in savings for the state now, but also resulting in lower levels of relief for some taxpayers and a higher burden on the state in later years.
Daniels was concerned that, if the legislature approves the funding change to the car tax phase out, depending on when that change is made it could potentially cause confusion or disruption for communities as they send bills out in May, June or July.
“That’s something where we’ll be reaching out to the general assembly and the speaker and the house and senate finance committees and asking for clarity sooner rather than later,” Daniels said. “We do not want to have a situation like we had two years ago.”