Friday, March 10, 1995
My Administration inherited a serious budget problem.
Some of the revenues relied upon by the previous administration to balance the budget never materialized.
We started with a $25 million deficit in the current fiscal year. That was a large hole which had to be filled by June 30, the end of the fiscal year. And for FY '96, we started with a deficit of over $40 million.
Revenues are flat and are not increasing fast enough. In fact, there has been almost no growth in state revenues since Fiscal Year 1992.
And, with the uncertainty of cuts on the federal level, we face the possibility of decreased federal funding, which would further decrease state revenues.
Over the last few years, there have been some severe cuts in certain state agencies, such as the Departments of Human Services, Health, and Environmental Management--to the point where certain critical state services, like nursing home and restaurant inspections, had been almost eliminated.
I approached the FY 1996 Budget with some core guiding principles.
First, I decided that there would be no increase in state income and sales taxes.
Our income taxes already are among the highest in the country. To increase them at the present time, in a stalling economy, would be wrong--it would undermine our efforts to attract business and jobs to the State.
I feel so strongly about this that I will veto any budget which contains any increase in the state income tax or the state's sales tax.
Also, my Budget contains no hidden tax increases in the form of increased fees paid by the citizens of Rhode Island for government services. In fact, we have eliminated the $10 over-the-counter fee charged by the Registry of Motor Vehicles. And, we will allow for the phase-out of the nursing home tax this year.
Second, we must have sufficient funds in the Budget to increase job opportunities, which is the number one priority of my Administration.
My legislative package already contains several bills intended to lower business costs in Rhode Island and to make Rhode Island a financial center.
In this Budget, I have recommended an additional $3 million for a new Rhode Island Economic Development Corporation, which will consolidate the Department of Economic Development and the Port Authority. The new corporation will not be just another independent agency. It will fall under the control of the Governor as Chairman of the agency, and a cabinet member, Marcel Valois, who will serve as Executive Director.
These funds would be used to create business retention programs to help existing Rhode Island businesses stay competitive and grow. Some of these funds will be used as challenge grants to local communities and regions in the State to form economic partnerships with private industry.
I also have requested $1 million to fund Centers of Excellence, an innovative program to brng University research and industry know-how together to create new products and companies in Rhode Island.
An additional $250,000 has been requested to fund the Rhode Island Economic Strategy Council.
The Council would receive a matching grant in the same amount from private businesses and will work to set the state's economic policy and to chart the course for a future of growth and prosperity.
Third, we must have sufficient funding in the Budget to fulfill the essential duties and responsibilities of state government, including protecting the public health and safety, and protecting and educating our children.
I have proposed increasing state funding for education by $20 million, which is greater than the rate of inflation. I have recommended that this additional money be distributed largely to the most needy school districts.
I also have requested an additional $1 million to begin my 21st Century Schools Program, under which funds will be allocated to communities to begin making investments in technology and other instructional materials required for students to be competitive in the next century.
My Budget also contains additional funds to hire 70 new social workers at DCYF to handle the growing caseload at that agency, and to fund a computerized Child Welfare Information System.
I am conducting a national search to find the best candidate to lead that department, and will be working closely with the new Director to make sure that the budget of that agency is wisely spent.
I have also requested additional resources for the Department of Corrections to meet the demands of a growing prison population and to ensure hardened criminals remain behind bars.
My Budget also has an additional $2.1 million for the Department of Transportation for road maintenance. Even with this amount, DOT will not have nearly enough money to repair and maintain our highways and bridges.
Most of the state agencies have been level funded--which means these agencies will not keep pace with inflation and will be required to keep positions vacant and downsize.
Further cuts in state agencies, without considerable and careful review -- which we are presently undertaking -- would not be responsible given the prior cuts in these agencies over the last few years and given that most my directors have been in place for only a few weeks.
The cuts which I had on the table were very difficult reductions in social service and other programs. Some of these programs assist the most vulnerable of our society.
Faced with this situation, I was compelled to eliminate general revenue sharing and PILOT funding for cities and towns, despite the opposition which I expected and have received from local officials. These two sources of local aid have not been consistent sources of revenues for municipalities. Moreover, additional educational aid would offset almost all of the local aid items.
I am firmly committed to reducing the siz e of state government and to improving the way it operates. I have already instructed each of my directors to look hard at their departments in order to eliminate unnecessary programs to avoid duplication of services, and to improve efficiency. It is my intention to create a government that is fundamentally different from today.
My Budget is the beginning of that process. The Budget includes the consolidation of the Department of Substance Abuse into the Department of Health, at a savings of nearly $1 million.
It also includes the consolidation of the Department of Library Services Into the Department of Elementary and Secondary Education, and consolidation of the Department of Economic Development.
We also have continued to reduce the number of state employees.
We have initiated a statewide hiring freeze on all positions except those deemed to be critical.
We intend to reform the state personnel system in order to streamline state government and make it more effective.
This Budget is the starting point in bringing a new kind of government to the people of the State of Rhode Island.