What’s in the Governor’s FY2019 Budget
Article 2 – Relating to State Funds
Under current law, the Board of Education has established a restricted receipt account for the Westerly Jobs Skill Center. This facility seeks to provide job training skills to adults in order to assist them in finding employment. Article 2 expands the program by allowing additional centers to be created “throughout the state.” The Governor has stated that she plans to open a facility in Northern Rhode Island. The law gives the Board the ability to collect lease payments from companies that rent space as well as to collect fees from room and services rentals to support the program.
Article 2 also addresses the Atomic Energy Commission. Starting July 1, 2018, all of the fees collected by the AEC will be placed in a restricted receipt account (today the fees go to general revenue) to support the “technical operation” of the agency. At the end of the fiscal year, any monies left in the restricted receipt account over $200,000 will be turned over to the general revenue fund. The AEC is responsible for overseeing the use of nuclear materials in the state, including nuclear research materials, and fees are charged for such use.
Lastly, Article 2 creates a Government Performance Improvement Fund to be paid for through general revenue appropriations that would assist the state in entering “Pay for Success Contracts” with vendors. The program envisions the selection of an independent evaluator selected by the state whose role would include assessing and reporting on the achievement of performance targets as established under a contract. If the vendor reaches a target, then payment is made.
Article 4 – Relating to Taxes and Revenue
This Article contains a number of proposed changes to the state’s operations:
1. State Lottery – Article 4 gives the Director of the Lottery Commission the sole authority to implement lottery-related initiatives, including pilot programs, with the goal of increasing revenue. Initiatives require periodic evaluations. The language also states that no program can be undertaken if it would constitute an “expansion of gambling requiring voter approval.” For those businesses involved in the retail sale of lottery games, it is unclear whether this provision would allow for on-line purchases of games. On-line purchase programs have led to underage gambling and off-shore sales in a few other states, as well as a drop in walk-in traffic for retail business establishments.
2. Sports Wagering – Article 4 allows for sports betting in the Lincoln and Tiverton Gaming facilities. While included in the Governor’s budget, this initiative could only take place if the US Supreme Court rules in favor of such activities. A decision is expected to be rendered soon. Because the wagering is confined to actual building facilities, the problems associated with underage betting and off-shore betting are alleviated. Still unknown is the amount that the state would garner from the expansion, i.e. what administrative fees would or should be paid to the hosting facilities? Is this a shared proposition between the state and the facilities? What liabilities, if any, do each of the partners assume? There are questions to be answered as the analysis continues.
3. Collections Unit – The budget proposal creates a collections unit within the Department of Revenue (DOR). A pilot program would be established to collect debt owed to state agencies. Debts included are: (a) those that are the subject of a written settlement agreement and the delinquent person failed to make payments, (b) those that are the subject of a final administrative order or decision with no timely appeal from the debtor; and (c) those that are subject to a court order with no timely appeal. An Agency would notify the debtor that he/she has 30 days to pay before the debt is sent to DOR. Once the debt is sent to DOR, the debt will accrue interest between 18% and 21% per annum. The Debtor can pay DOR in full within 30 days of notice from DOR (including interest owed). If the debt is not paid within that 30 day period, the debt will also include a fee of 12% of the outstanding debt plus and costs associated with the collection of the debt.
4. Tax on Software – The budget proposal expands the sales tax to “vendor-hosted prewritten computer software which is defined as “prewritten computer software that is accessed through the Internet and/or a vendor-hosted server regardless of whether the access is permanent or temporary and regardless of whether any downloading occurs.” The Chamber is still researching the impact of this proposal.
5. Tax on Investigation Guard, and Armored Car Services – Article 4 expands the sales tax to the security services and includes all those with the SIC (56161). It is unclear why these services were chosen or what the revenue impact might be on an annual basis.
6. Tobacco Tax – The budget proposal expands the sales tax to include electronic cigarettes including vaporizers and liquid solutions. This section also includes a $.25 per pack increase on cigarettes. Rhode Island currently taxes a pack of cigarettes at $4.25 per pack – this is due to the Governor and legislator increasing the tax by $.50 last year. Should the quarter increase be successful, RI would boast one the highest taxes in the country. It is also important to note that last year the Division of Taxation agreed that each time the tax goes up, the black market sales of cigarettes increase. For convenience store owners, this tax is extremely difficult as tobacco accounts for a large portion of sales inside the store. The Article calls for an August 1, 2018 effect date for the increase.
The following bills were filed last week:
House Bill No. 7269, AN ACT RELATING TO BUSINESSES AND PROFESSIONS -- CENTRAL SERVICE TECHNICIANS (Provides for the licensing and regulation of central service technicians.)
House Bill No. 7278, AN ACT RELATING TO TAXATION - SALES AND USE TAXES - LIABILITY AND COMPUTATION (Repeals the sales tax on pet care services.)
House Bill No. 7285, AN ACT RELATING TO HEALTH AND SAFETY -- COMPREHENSIVE HEALTH INSURANCE PROGRAM (Establishes a universal, comprehensive, affordable single-payer health care insurance program.)
House Bill No. 7299, AN ACT RELATING TO HEALTH AND SAFETY - PUBLIC HEALTH AND WORKPLACE SAFETY ACT (Provided that any law or regulations which prohibits or protects a person from exposure to second-hand smoke would include second-hand marijuana smoke or vapor.)
House Bill No. 7307, AN ACT RELATING TO HEALTH AND SAFETY (Encourages commercial property owners to install vehicle barriers at their retail establishment locations, and also permit insurers to consider the installation of such barriers to provide a discount on the owner's insurance policy.)
House Bill No. 7317, AN ACT RELATING TO TAXATION -- SALES AND USE TAXES--LIABILITY AND COMPUTATION (Eliminates the assessment of the sales and use tax on taxicab services.)
House Bill No. 7322, AN ACT RELATING TO ALCOHOLIC BEVERAGES - RETAIL LICENSES (Provides that holders of a Class P alcoholic beverage license may purchase alcohol at retail or wholesale.)
House Bill No. 7325, AN ACT RELATING TO LABOR AND LABOR RELATIONS -- PAYMENT OF WAGES (Creates a legal process to aid employees in collecting their unpaid wages from their employer.)
Senate Bill No. 2116, AN ACT RELATING TO WATERS AND NAVIGATION -- THE OFFSHORE OIL AND GAS DRILLING AND EXPLORATION ACTIVITIES CONTROL ACT (Regulates activities of offshore drilling for oil and gas in federal waters to minimize adverse effects resulting therefrom within the state's territorial waters and coastline.)
Senate Bill No. 2145, AN ACT RELATING TO PROPERTY -- ELECTRONIC RECORDING (Authorizes a city or town clerk/recorder of deeds, at the clerk's/recorder's option, to accept electronic documents for recording real property and land records and to index and store those documents.)