Legislative Updates
Advocacy in Action from the R.I. Chamber Coalition
The House Finance Committee passed a budget at about 11:30 p.m. Tuesday night. The $14.334 billion budget includes $45 million for primary care doctors, $38 million in extra money for hospitals, $12 million for nursing homes, and more money for education than provided for in the Governor’s budget. During the media briefing, the Speaker said, “Do I want to come back in October? No.” but he acknowledged it might be necessary if the federal government makes certain cuts to state grants or to state programs where federal funding is significant. The full House will vote on the budget Tuesday, June 17th.
How did the House Finance budget find revenues for these initiatives? Article 5 SubA contains many new tax proposals including the following:
- Whole homes that are rented for less than thirty days would be subject to the hotel tax. Currently, those properties are exempt.
- The hotel tax increased from 1% to 2%
- Real estate conveyance tax – the budget includes a 63% increase in the real estate conveyance tax which is paid at the time of sale of a property. Prior to 2021, all properties were taxed at $2.30 per $500 of sale price. In 2021, the General Assembly increased the tax on residential properties selling at a price over $800,000 – adding another $2.30 per $500 for the portion of the selling price over the threshold (sometimes referred to as Tier 2 properties). This year, an additional increase of 63% is included on both Tier 1 and Tier 2 properties. As an example, the median price for a Rhode Island home is $512,750. Under current law a seller of that home would pay $2,358.65 in conveyance tax at the time of sale. Article 5 SubA raises that tax to $3,845.63; and increase of $1,486.98. A home sold for $900,000 today would cost the seller $4,600 in conveyance tax. Article 5 SubA raises it to $7,500. The tax increase is estimated to raise $13.5 million in this fiscal year and $18.7 million in FY27.
- Sales tax is applied to short-term parking up to one month. Estimated to generate $1.6 million
- Gas tax increases by 2 cents per gallon with a majority of the revenues going to RIPTA. The existing gas tax law has an automatic adjustment every two years. On July 1, 2025, the gas tax will rise to $.38 a gallon (plus the $.01 per gallon environmental fee). The proposed budget will raise the gas tax to $.40 a gallon (plus $.01 environmental fee) for a total state tax of $.41 a gallon. Massachusetts gas tax is currently $.24 per gallon. Connecticut has a $.25 per gallon gas tax, but also has an 8.1% tax on gross earnings at the wholesale level, making it more difficult to compare.
- The Governor’s proposed tax on digital advertising was not included in the House budget. This tax was passed in one state and that state is in costly litigation while unable to collect the tax. The Speaker made it clear he was unwilling to rely on revenue from a tax structure that would be challenged in court leaving a hole in the budget.
- A new state tax on non-owner-occupied homes is included in this budget. Some media outlets have dubbed this the “Taylor Swift” tax. The language defines “non-owner occupied as “the residential property does not serve as the owner’s primary residence and is not occupied by the owner of the property for a majority of days during a given taxable year.” If the property has an assessed at a value over $1 million, and the property is not rented for more than 183 days during the previous taxable year and was subject to the room reseller tax, or lodgings tax. The tax amounts to $2.50 for each $500 of assessed value in excess of $1 million. The tax is levied in addition to all other taxes assessed. The tax can be paid in four quarterly payments, with the first installment due September 15th of a given taxable year. To date, no estimate of revenue to be collected has been published.
- There are a number of fee increases in the budget: a $1 increase in the technology surcharge fee for vehicle registrations, a new $200 fee each time a battery electric vehicle is registered, $100 for a plug-in hybrid registration, a $50 fee for a hybrid electric vehicle, increased penalties for various law infractions.
One positive note in the budget – the Workers Compensation Administrative Fund was taken out of the Indirect Cost Recovery program. Currently the Department of Labor and Training (DLT) keeps 10% of the Workers’ Compensation Administrative Fund dollars paid by businesses. The Governor proposed to increase the percentage to 15%. The House budget eliminates the diversion of funds to DLT – keeping $3.6 million in the workers compensation administrative fund ultimately saving businesses money.
TCI Bill Amended on the Senate Floor Last Week
S.974aa, An Act Relating to Labor and Labor Relations – Temporary Disability Insurance – Contributions, was amended on the Senate floor to remove the language increasing the maximum number of weeks an employee can take for Temporary Care Giver (TCI) reasons. The bill originally proposed to increase the weeks to ten weeks in 2027 and twelve weeks in 2028. Under current law, employees may take up to seven weeks off in 2025 and eight weeks off starting January 1, 2026 to care for various family members. The Senate noted business concerns surrounding the challenges finding replacement employees as the reason for the amendment. The senate did add “siblings” to the language meaning employee can use TCI to care for siblings. https://webserver.rilegislature.gov/Billtext25/SenateText25/S0974aa.pdf
The House version – H.6066 is scheduled for a vote Monday in House Labor. The bill is posted in a SubA form to mirror the changes made on the Senate floor.
This Week At the State House
The General Assembly hopes to complete its work either Wednesday or Friday. The Juneteenth holiday prevents the legislature from coming into session Thursday. This edition of Advocacy in Action includes legislation scheduled for hearing or vote as of Sunday. The House and Senate may add bills throughout the week. If the legislative work is completed this week, bills will be transmitted to the Governor periodically over the following few weeks. The Chamber will send out a final legislative wrap-up once that process is concluded, providing a list of new laws business need to consider.
Monday, June 16th
Labor Relations Board
S.124 SubB and H.5187 SubA, Acts Relating to Labor and Labor Relations – Labor Relations Act changes the definition of “employee” under Rhode Island law. Members of the unions are pushing this bill as a means to head off any changes in the National Labor Relations Board. S.124 SubA was amended as the Chamber requested related to the definition of “employee.” The new definition reads “"Employee" specifically includes any teaching assistants, research assistants, fellows, residential assistants and proctors who perform services for an employer or are under an employer's control or right of control, in return for payment or other compensation, notwithstanding whether the employee is a student, or the supervised teaching, research, or other services are a component of their academic development.” These individuals are currently covered in Rhode Island. The S.124 SubB version and the new SubA version of 5187 proposes to eliminate language that defines the “right of control.” See https://webserver.rilegislature.gov/BillText/BillText25/Proposed25/H5187A.pdf and https://webserver.rilegislature.gov/BillText/BillText25/Proposed25/S0124B.pdf for the new language to be voted on Monday.
Captive Audience Bill
H.5506 SubA and S.126 SubA are scheduled for a vote Monday. These bills, Acts Related to Labor and Labor Relations – Employe Free Speech Rights, limit the First Amendment and Fourteenth Amendments rights of employers by barring them from holding mandatory meetings with employees to discuss any issue covered under the bill’s definition of “political matters.” The definition was tweaked only slightly. “Political matters” is defined as, “topics that are unrelated to the employer's business or business activities, such as subjects relating to elections for political office, political parties, proposals to change legislation or regulations which are not directly related to the employer's business, and a decision whether to join or support any political party or political, civic, community, fraternal or labor organization.” It is this very situation that was anticipated, and addressed by Congress under the Taft-Hartley Act of 1947. That federal law specifically allows employers to hold such meetings provided they do not threaten employees in the meeting. Both H.5506 SubA and S.126 SubA undermine the employer employee relationship. The amended language can be found at: http://webserver.rilegislature.gov/BillText/BillText25/Proposed25/H5506A.pdf and https://webserver.rilegislature.gov/BillText/BillText25/SenateText25/S0126A.pdf
Retail Sales to Seniors
H.5831, An Act Relating to Commercial Law – Senior Savings Protection Act, requires any business engaged in the sale of goods or services who offers a discount to its customers for utilizing automatic payment systems, via ACH or EFT or similar payment systems, to provide the same discount to any person who is 65 years of age or older who makes a payment using paper checks. The bill is scheduled for a vote in the House Corporations Committee. https://webserver.rilegislature.gov/BillText/BillText25/HouseText25/H5831.pdf