PROVIDENCE -- Seeking to "substantially improve Rhode Island's economic climate,'' Governor Chafee is proposing to cut the state's 9-percent corporate tax rate over three years to what he hopes will be the lowest level in New England.
The new $8.17-billion budget that Chafee proposed to lawmakers on Wednesday night would reduce the 9-percent corporate tax rate to 8 percent on Jan. 1, 2014, 7.5 percent the following year and 7 percent in 2016.
"This will improve our economic competitiveness, help our existing businesses grow and encourage others to invest in our wonderful state,'' Chafee said.
To help offset the $8 million in lost revenues, Chafee proposes to eliminate an enterprise-zone tax credit, and cut in half, over two years, a "jobs-development'' deduction that primarily benefits pharmacy giant CVS.
As it stands, Rhode Island's 9-percent corporate tax rate is one of the highest in the nation. When a Connecticut surtax expires on Jan. 1, 2014, Rhode Island's rate would become the highest in New England, according to a 2012 Federation of Tax Administrators chart.
Overall, Chafee's budget would increase state and federal spending in Rhode Island from $8,099.8 billion this year to $8,172.5 billion in the budget year that begins July 1.
There are no new taxes or fees in his proposal, which goes to the General Assembly for review.
"Taxpayers have already shouldered enough of the cost of government and the delicate recovery we are in today should not be derailed by any tax increases,'' he said in a written summary.
On the spending side, Chafee is proposing $30.3 million in new aid to local school districts, the creation of a $10-million municipal incentive program for cities and towns that have pension-funding plans, an additional $5 million for "distressed communities'' and $10 million for "local road and streetscape improvement(s).''
His budget would also funnel an additional $8.2 million overall to the University of Rhode Island and the state colleges with the expressed hope that, when coupled with "savings and efficiencies,'' this money will "ensure no tuition increases'' next year.
His spending plan also reflects a $69.8 million infusion from President Obama's health care overhaul to provide Medicaid coverage - for the first time - to a potential 22,000 "non-disabled, childless adults'' who are poor.
On the cost-cutting side, Chafee has proposed a swath of Medicaid cuts, including the suspension of a planned increases in Medicaid reimbursements to nursing homes. .
But the over-arching theme of the state-of-the-state address, and the budget he proposed to lawmakers was: "jobs''.
He proposed two new programs. One would reimburse companies, for up to 10 weeks, for 50 percent of the cost of hiring and providing on-the job training to a potential 425 Rhode Islanders this year, 1,050 next year. A second would provide subsidized on-the-job training specifically to people on welfare.
State government itself would also put more people to work. His budget would open jobs for 145 more state employees. It would also step-up the timetable for $11 million in "shovel-ready'' state construction and renovation projects.
Read the prepared text of Governor Chafee's address to the General Assembly