The House and Senate have passed a budget blueprint for the state for FY 2015. The plan calls for spending $8.7 billion up from $7.7 billion in FY 2013. The budget is actually combines state and federal spending and the total funded by Rhode Islanders -- $3.9 billion – indicates the extent to which the state is dependent on the federal government.
The budget included a reduction in the corporate tax rate from 9% to 7%, and a reduction in the estate tax by increasing the exemption from $922,000 to $1.5 million. Another provision eliminated the toll on the Sakonnet River Bridge and froze tolls on other bridges while funding road and bridge construction. Finally, the budget banned local minimum wages, which could have resulted in a crazy quilt of wage laws within a small state. In a memo to state lawmakers, NFIB praised the progress on the tax front and the attention paid to the state’s business climate, but called for more focus on tax relief for small businesses in 2015. NFIB suggested putting the minimum business corporation tax, the sales tax, energy taxes, and the gas tax on the table as those assessments directly impact small business costs and the state’s job growth.
In other action, the state appears set to increase the minimum wage for the third time in three years to $9 per hour – much higher than anticipated a few weeks ago. NFIB stressed the impact of increased labor costs on job creation, especially in small businesses. Also, any increase in the minimum wage makes the preemption of local wage regulation absolutely critical.