Header, the Administration of the Honorable Lincoln C. Almond
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June 6, 2002


In accordance with the provisions of Section 43-1-4 of the General Laws, I am transmitting herewith, with my disapproval, 02-H-7732 Substitute A, As Amended, "An Act Making Appropriations for the Support of the State of Rhode Island for the Fiscal Year Ending June 30, 2003."

It is disheartening that this is the final budget of the 150 member General Assembly. The budget is a fiscal nightmare, a policy disaster and constitutional crisis. While it has been said that the budget is a result of the political realities of a re-election year coupled with downsizing, it is my strong belief that political expediency does not justify budgetary irresponsibility. Because of the term limitations on the Governor, I have no political aspirations clouding my policy judgment. My concern is the future of our great State. The people of Rhode Island expect more and deserve better than this budget.

Fiscal Nightmare and Policy Disaster

My main concern is that the overspending in this budget will leave my successor with a budget hole of over $200 million to confront on inauguration day. That is a result of overspending and inappropriate reliance on one-time revenues, in particular, the use of over $200 million from the sale of Tobacco Settlement revenues in the next 13 months. I had proposed a prudent use of tobacco securitization proceeds that would not leave the next Governor in a hole. My proposal was to use up to $300 million in proceeds to pay down State debt. The remainder would be used over a multi-year period, so that as the economy rebounded, the dependency on these revenues would wane.

This budget raises the gas tax by 2 cents per gallon, cigarette taxes and a host of other fees. Prior and current year increases in fees and sin taxes will leave future leaders with few options for revenue generation other than broad-based tax increases that will hurt Rhode Island's competitiveness with neighboring states and within the national economy. As I have said before, we must not go back to the bad old days when the national economy thrives and Rhode Island is left behind.

The budget also calls for increasing the auto excise tax exemption from $3,500 to $4,500 at a cost of nearly $40 million to my budget proposals for this fiscal year and next and it contributes at least that amount to the opening deficit with which the State will be faced in 2004. When first enacted I warned that the excise tax repeal was unaffordable. That has been proven true. From its inception through fiscal year 2003, the phase-out of the automobile excise tax will cost the state over $350,000,000. If we had put this money into a surplus fund, we would not be facing the fiscal issues we have today, nor would we need to be draining all of our tobacco settlement funds.

The budget also rejects my proposal to increase the State's share ofVLT revenues and eliminate taxpayer funded dog racing - at a savings of over $30 million had they been enacted as proposed. The continued subsidy of the dog kennel owners at Lincoln Greyhound Park is incomprehensible. The kennel owners are not subject to any state oversight of their finances and there has been no credible testimony that would demonstrate that any subsidy is necessary. For a business that provides less than $5 million a year in direct taxes, the State will give back over $13 million this year in payments. No other taxpayer gets such a deal because it makes no fiscal sense for the State.

While the General Assembly is subsidizing greyhound dog owners, the General Assembly is shortchanging higher education. During my Administration, we have made significant investments in this area. We have helped keep a lid on tuition increases, and we have improved the learning environment at all of the campuses. The quality of education has improved, as well as the physical infrastructure. We have made these investments knowing that higher education is key to our economic development. By slashing higher education so deeply we are hurting our families, and harming our economy.

In sum, the inability of this budget to make necessary spending cuts and rein in spending will greatly impede the ability of the next Governor and General Assembly to present a balanced, structurally sound budget. It will be a legacy of this General Assembly; not of this Governor.

Constitutional Crisis

This budget, as presented to me, attempts to make the most unprecedented power grab in the history of Rhode Island. In a last minute maneuver, the Senate leadership insisted that provisions creating legislative control over State hiring and contracting be turned over to appointees of the Senate Majority Leader, the Speaker and the Governor.

The Senate leadership claimed the power grab was necessary because of alleged actual and potential hiring and runaway spending by the executive branch. First, political convenience does not justify an unconstitutional takeover of the executive branch. Second, the allegations are pure myth. In the seven months since my hiring freeze was imposed, the legislature has increased its employees by 9, and the courts by 13, while the rest of the government has 111 fewer employees. Moreover, the legislature is the only entity in state government with more employees than authorized by law.

Regarding alleged runaway spending by executive departments necessitating supplemental budget increases, the truth is that most of the increased spending has occurred in the areas of mandated programs - such as the auto excise tax phase out - which were enacted into law by the General Assembly. Moreover, my proposed supplemental budget (which was never separately passed by the legislature) could well be the only supplemental budget ever submitted in the history of the State that actually proposed a reduction in State spending.

The budget also requires that the Administration reduce agency spending, cutting 2% in personnel, 5% operating costs and 10% contracted services. Continuing the fiscal restraint I commenced certainly is warranted. The restraint, however, is selective. The budget prevents the Governor from cutting local aid, grants or capital projects, protecting pet projects of the legislature that I have proposed cutting. At the same time as the executive branch is being cut, the legislative budget is up $2.2 million and the judiciary budget is up $1.8 million over my recommended budget.

Hearing the constitutional outcry against its attempted takeover of the executive branch the legislature relented and made its commission advisory only in a separate piece of legislation. The fact, however, that the General Assembly came so close to a last-minute coup d'etat of the executive branch shows more vividly than ever that we need to fix our Constitution now through constitutional amendment. The House should allow debate and pass a separation of powers constitutional amendment for the voters which is pending before it at the earliest time. This issue is not about politics; it is about providing the people of Rhode Island with a government with balanced powers. The legislature must stick to legislating the law, the courts to interpreting it and leave to the executive branch the implementation and enforcement of the law.

As I veto this budget, the Senate has not yet passed a bill, approved by the House at my request, to fix the composition of the new tobacco securitization commission contained in this budget by removing legislative appointments from the board. The Attorney General has refused, and correctly so, to certify that the legislatively-dominated composition is constitutional. As such, no securitization can take place until constitutional legislation is passed. The Senate must end the constitutional and fiscal crisis contained in this budget immediately or we will face a monumental fiscal crisis. While the General Assembly can, over my obj ection, appropriate $ 13 5 million of tobacco money this year, I -not the legislature - have the constitutional obligation to implement that decision. Failure to recognize this by fixing the composition of the commission places not only the legislature's own securitization plan in danger, but also the fiscal health of the State.

The legislative power grabs contained in this budget should tell Rhode Islanders why we need a constitutionally separate and independent executive branch now more than ever.

For the foregoing reasons, I disapprove of this budget and respectfully urge your support of this veto.


Lincoln Almond