NEWS

Interview with the governor: 'We need ... money'

Shortfall of up to $200M casts shadow over priorities, with education at the top

Katherine Gregg,Patrick Anderson
kgregg@providencejournal.com
State budget analysts foresee a state budget shortfall of $180 million to $200 million this year and next. In an interview last week, Gov. Gina Raimondo said she cannot rule out tax and fee hikes that she has been loath to consider in the past. [The Providence Journal / Kris Craig]

PROVIDENCE — Gov. Gina Raimondo tells the story of how a group of high school students in Central Falls schooled her on their "drug of choice."

The setting: a roundtable discussion with students in one of Rhode Island's poorest cities, a week after she had signed an executive order temporarily banning the sale of flavored vaping products

"And the kids said vaping is expensive. 'We use that as a treat for party nights .... Marijuana is the day-to-day thing.'"

"Like, wow," Raimondo remembered thinking and maybe saying. "How do you obtain that? And they’re like, 'Attleboro is 10 minutes away, if you haven't noticed.' So we are kidding ourselves if we think we don’t [already] have recreational marijuana [in Rhode Island]. Talk to the state police. They see it on the roads."

The term-limited Raimondo recounted that story last week during a wide-ranging interview on her legislative agenda for the General Assembly session that begins Jan. 7.

Yes, for the second year in a row, she intends to propose legalizing the adult use of marijuana — and not, she said, just because of the millions of dollars in new revenue it could provide the state (at least $9.4 million a year, the state estimates) but because she sees unregulated access to the drug as a "safety issue." 

Legalizing marijuana is not her top legislative priority. But it is one she says she is more likely than not to pursue in 2020, along with a renewed push for a ban on "military-style" weapons.

"I don’t know what it is going to take to get the legislature to understand that people deserve to live in a Rhode Island that is free from military-style weapons in our neighborhoods and in our schools. I don’t understand the opposition," Raimondo said, "so I am going to try for it again."

Her top priority? "Education."

But in a year when the state again faces a multimillion-dollar budget hole, she said she is not likely to renew her bid to expand Rhode Island's free-tuition program beyond the Community College of Rhode Island. ("I think it's tough in this budget.")

She also sees no compelling reason to shovel more money into the deeply troubled Providence school system while a state takeover is underway.

She said the Ernst & Young accounting firm went "line by line of the City of Providence school budget, and I didn’t leave the interim update thinking this is a cash-strapped school district. I left thinking, hmmm, there’s a lot of money there."

Some other highlights from the interview: 

Taxes and spending: With the state's budget analysts projecting a $180-million to $200-million gap between revenues and spending in this budget year and next, Raimondo said she cannot rule out tax and fee hikes, which she has been loath to consider in the past.

"We need some money," she said. "You cannot balance a budget that is $200 million in the hole without doing some difficult things ... you [would] like not to do."

(For what it's worth: If state agencies were given all of the money they say they need next year, the state-funded portion of the budget would increase by more than $177 million.)

"We've really squeezed Medicaid. It's still a third of our budget .... It’s getting harder and harder to cut, so you have to find some revenue ... and the honest answer is I don't know where I am going to find it."

She drew a line at the proposal by a band of progressive candidates to raise the top marginal income-tax rate on Rhode Island's highest earners from 5.99% to 10.99%.

"I certainly can never get behind something that is essentially a doubling of the rate and would put us out of step with our neighbors," she said of the proposal advanced by the Rhode Island Political Cooperative, co-founded by her 2018 Democratic primary challenger, Matt Brown.

"I see where they are coming from," she said of the group's desire for new investments in pre-kindergarten, health care and job training. But, "people have choices about where to go, and I worry about people (and companies) leaving our state to go to a lower-tax environment." (She said she would support a higher tax on the wealthy at the federal level.)

While she said she is likely to again propose a new tax on large employers with employees on Medicaid, she said she has been talking to CEOs about possible alternatives.

Asked whether she will try again to push into the future some of the cost of the car-tax phaseout championed by House Speaker Nicholas Mattiello, she said: "Everything is on the table."

She called the multiyear phaseout — with the state reimbursing each of the cities and towns for their lost local revenue — "a great idea," but "very expensive." The cost in the current fiscal year is $94.3 million, and it could be $115.3 million next fiscal year.

Housing: Raimondo said she is trying to come up with a permanent and steady revenue stream to address Rhode Island's shortage of affordable housing and its homelessness problem.

"I don’t know where it will come from. I have a $200-million hole. But everyone who is an expert in this area tells me: If you are serious about housing, you need a steady funding stream .... So if we can find a way to do it, I’d like to do it."

"I just have to find some money," she said. "It could come from anywhere. It could come from an income tax. It could come from a sales tax. It could come from a fee." 

Raimondo's office noted that the Connecticut Department of Housing levies a fee on every real estate transaction and assesses interest on real estate brokers’ escrow accounts to invest in housing initiatives. Massachusetts’ Department of Housing and Community Development matches a surcharge on property conveyance documents.

Climate change and the gas tax: One of Raimondo’s biggest policy projects is coming together far from Smith Hill: a regional Transportation Climate Initiative that is expected to include some form of tax on gasoline. 

A partnership of a dozen Northeastern states is expected to announce more details of the plan this week. It’s already drawing fire from conservative groups.

Raimondo does not expect more than a commitment initially, with an actual plan as much as a year away.

"Yeah, there is going to be some element of a fee on fuel. Now, how do you assess it? What do you assess it at? ... What do you [do] with the proceeds? That still needs to be figured out,” she said about the plan, which is modeled on the Regional Greenhouse Gas Initiative program for the energy sector.

What's her message to Rhode Island drivers about the costs of the program being passed on to drivers at the pump?

 “It is a fact we have to get off of gas-guzzling cars for the existence of us,” she said. “If we don’t do it, we will all be in much bigger trouble because climate change is here and it is real and we need to meet the challenges."

She added, “By the way, there will be benefits to consumers. This money will result in more, better, faster electric trains, more electric forms of busing and public transit."

"Listen," she said. "I don’t want to raise the gas tax … I don't want to make a burden for people, but we do have to wean ourselves fast from fossil fuels, and 40% of emissions come from transportation, so we can’t put our head in the sand."

Vaping: Raimondo said she awaits the recommendations of a study group, but anticipates the need for some "statutory changes" to make her executive order "permanent and stable."

"I don’t think I would support a total ban on vaping because there is a lot of evidence, and I have become convinced of it, that adults do use vaping as a way to stop smoking, and that’s a good thing," she said. She said her concerns remain focused on flavored vapes because they are "marketed to children," and aimed at getting "10, 11, 12-year-old kids addicted to tobacco products."

Has she ever vaped?

"I’ve never used marijuana. I’ve never smoked. I've never vaped .... A super boring governor," she said.

On her rocky relationship with the Assembly, and Speaker Mattiello in particular: "None of it is personal," she said. "I like him. We go out to dinner. We have a good time."

"But I have a job to do and I have things that I know Rhode Islanders want and deserve ... investments in education, pre-K, gun safety, et cetera .... It is my sincere hope that we can do what we pretty much always do, which is argue and then meet in the middle and get the ball down the field."

"And if they want to collaborate, I really want to collaborate, because we have a job to do .... But if they want to fight, I’ll fight, and I hope to have 1-million-plus dollars." She said she has $679,516.94 in her campaign account and is still raising money, and could use it to oppose the reelection of lawmakers who oppose her.

"They are all on the ballot," she said. "It's not personal ... but we have a job to do."