McKee's $12.8-billion budget targets COVID recovery, avoids tax or fee hikes

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Gov. Dan McKee on Thursday proposed spending $12.8 billion next year in a state budget that seeks to jolt Rhode Island out of its COVID doldrums with hundreds of millions of federal dollars to help businesses and build homes.

The tax and spending plan for the year starting July 1 would not raise broad-based taxes, nor cut them. In a departure from recent budgets, most state user fees, such as beach parking charges, would stay as they are.

McKee wants to invest $168 million in the troubled Eleanor Slater Hospital system, including spending $108 million on a new hospital building in Burrillville.

He also wants to channel $50 million in downpayment assistance to would-be homebuyers struggling to find houses.

And, yes, he once again proposes legalizing recreational marijuana sales.

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Despite being awash in federal cash and blessed with a rare start-of-the-year budget surplus, McKee's budget largely avoids creating new permanent government programs or expanding public benefits.

Instead, he wants to use the surplus and $1.1 billion the state received from the American Rescue Plan Act on a series of big, temporary cash injections to trigger economic growth, fight climate change and ease the staffing shortages plaguing many industries.

Gov. Dan McKee at a weekly COVID briefing in December.
Gov. Dan McKee at a weekly COVID briefing in December.

"We have a historic opportunity to write Rhode Island’s next chapter now, with $1.13 billion in federal funds and an over-$600-million surplus available to invest in our state’s future," he said in a budget introduction letter.

McKee has unveiled some of his proposals to use American Rescue Plan money earlier, including $250 million for a raft of housing programs, $95 million to grow wind-turbine staging ports in East Providence and Quonset Point, $37 million to help people install electric heat pumps and $22.5 million for "higher-education academies."

But there is much more, including:

Aquaculture oysters from Ninigret Pond.
Aquaculture oysters from Ninigret Pond.

$70 million toward unidentified recipients in "Blue Economy" industries including "ports, shipping, defense, marine trades, ocean-based renewables, aquaculture, fisheries, tourism and recreation." And McKee also wants to create a "Blue Technology Innovation Center" that turns research, including data from a network of sensors in Narragansett Bay, into business ventures.

$47 million to the Rhode Island Convention Center, including $9 million to cover operating losses and $38 million for unspecified "facility improvements."

$15 million to McKee's "municipal learning centers," a kind of afterschool program he pioneered as mayor of Cumberland and has been trying to introduce elsewhere.

-$45 million for a new round of small business grants.

$30 million to replenish the state's Unemployment Insurance Trust Fund and ward off future increases to the payroll taxes that fund jobless benefits.

$46 million to rebuild the pier and bulkheads at the Port of Galilee in Narragansett

$30 million to build "shared wet-lab space" for the bioscience industry

-$28 million to the tourism and hospitality industries

$3.3 million to connect the Adult Correctional Institutions in Cranston to the internet

$5 million to build restrooms, customer-service windows and covered waiting areas at the commuter rail station under construction in Pawtucket.

And a $150-million public health contingency account for unforeseen COVID emergencies


If they can find a home for sale in the state's tight housing market, prospective homebuyers could get up to $17,500 to put toward their down payment.

The $50-million plan targets buyers from low-income and minority communities. Specific eligibility rules haven't been written yet, but Commerce Secretary Stefan Pryor said they would target buyers with lower incomes and credit scores than traditional lenders work with.

At the start of the year, state lawmakers approved $15 million for affordable housing development through Rhode Island Housing, and McKee's budget proposes adding $90 million more.

With the money, administration officials hope to build 1,000 new apartments for people making no more than 80% of the area median income, and to preserve another 500 units.

Also from the federal kitty, the budget proposes a $25-million grant program for buying property that can be developed into affordable housing, $20 million to "support workforce housing," $21.5 million to house homeless Rhode Islanders, and $25 million for "the express purpose of creating housing and community/commercial spaces that satisfy community needs, as well as supporting critical home repairs."

Social services

State Office of Management and Budget Director Brian Daniels said one of McKee's primary budget objectives was not to spend money that would leave a giant hole when the federal money goes away.

But it's unclear what happens to some of the proposed payments to social-service providers after the Rescue Plan money runs out.

McKee is proposing $42 million in retention bonuses for childcare workers; $12.5 million to boost wages of Department of Children, Youth and Families workers; $15 million to pediatric medical practices; $11 million to early-intervention providers for young children and $10 million to anti-hunger nonprofits.

What happens when that money is spent?

"We are keeping an eye on what is going on with the Build Back Better Act," Daniels said about President Joe Biden's wide-ranging domestic spending bill. "That is something that may address some of these costs."


The Greenleaf medical-marijuana dispensary in Portsmouth in 2015.
The Greenleaf medical-marijuana dispensary in Portsmouth in 2015.

McKee once again seeks to legalize recreational marijuana sales. But lacking an agreement with General Assembly leaders on how legalization would work, his budget doesn't expect pot shops to open until sometime in 2023 at the earliest.

Under the plan in McKee's budget, the state would expunge past marijuana convictions for offenses that would no longer exist.

In a full year, the budget estimates taxes and fees on marijuana sales would generate around $17 million per year.

The numbers

McKee's budget would spend 2.2% less than the $13.1-billion budget lawmakers passed for the current year and about 1% less than last year. However, it represents a 16% increase from the $11-billion pre-pandemic fiscal 2019-2020.

Eleanor Slater Hospital

McKee called a halt to his predecessor's controversial new-construction and downsizing plans when he took office last March.

But he has now embraced several key pieces of Gina Raimondo's plan for the state-run hospital with campuses in Cranston and Burrillville, and is now proposing a $167.8-million investment in the Eleanor Slater Hospital over the next seven years.

Along with his previously announced plan to relicense one of the buildings on the Cranston campus as a standalone psychiatric hospital, he proposes to build a $108.2-million "long-term acute-care hospital" on the sprawling Zambarano campus in Burrillville.

The new 100-bed hospital would be "tailored to meet the needs of the patients already served at the facility,'' and others in need of "services with limited availability in the state and ... specialized populations."

The plan that consultant Alvarez & Marsal designed for Raimondo assumed tens of millions in annual savings from a major downsizing of the Zambarano population – and unionized staff.

It assumed the state could transfer patients with serious, long-term medical conditions and injuries to other unidentified destinations. The aim: to reduce the population of a hospital with a capacity of 189 medical condition patients – and 84 actual patients at that point in 2020 – to 59.

There is no mention of downsizing in McKee's proposal, only new construction on the Zambarano campus along with "essential upgrades" to the mechanical and oxygen-supply systems, for example, as part of a $210-million investment in improvements to state buildings, including the State House ($45 million).

McKee also earmarked $22.4 million for the introduction of electronic medical records at the state hospital, as has long been required and needed, according to teams of independent inspectors.

On a related front, McKee is proposing major spending in the broader arena known as "behavioral health."

That includes $28.1 million to spur the creation within the state's existing mental-health network of behavioral health clinics designed to provide "de-institutionalized ... supports, medical screening and monitoring and social services to particularly vulnerable populations with complex needs."

McKee also proposes the creation, on a pilot basis, of a "mental health court" to steer defendants with mental illnesses to treatment programs, in lieu of prison or commitment to the state hospital.

"Successful completion may result in jail diversion, the reduction of charges, alternative sentencing, or the dismissal of charges."

While key lawmakers have proposed the construction of a separate psychiatric facility for troubled girls in the care of the state's Department of Children, Youth and Families, McKee seems to envision a scaled-back, $6-million version.

Pension debt

McKee is seeking to wipe pension debt off the state's books that dates back to the 1991-92 financial and credit union crises.

More specifically, he is proposing to plunk $61.9 million of the state's surplus into the pension fund to close the chapter of the deferred taxpayer contributions that taxpayers have been paying off ever since at a cost of roughly $6 million a year.

McKee says this will result will produce "annual savings for more than a decade." (The state long ago repaid $20 million actually borrowed from the fund.)

This article originally appeared on The Providence Journal: McKee releases $12.8-billion budget plan for Rhode Island

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