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FY 2010 Changes to Governor ~ __
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Revenue Changes1. May Revenue Estimating Conference. The Revenue Estimating Conference concluded May 11and revised the FY 2009 estimate to $3,072.3 million, which is $70.0 million less than the revenuesincluded in 2009-H 5019, Substitute A, as amended. It lowered the FY 2010 forecast to $2,915.0million, which is $129.6 million less than November after adjusting for the changes in 2009-H 5019,and $130.1 million less than the Governor's budget revised for his changes included in the estimate.2 Capital Gai ax as Ordinary Income Th House Finance Committee recommends taxingcapt a as ordinary income and includ 23.6 millio revenues. Under current law, RhodeIsland taxes capital gains income based on the length
0
time the seller has owned the asset. If an assetis held for five-years or more, then the capital gains income from that asset is taxed at 0.83 percent,1.67 percent, 2.08 percent or 2.33 percent rate contingent on the taxpayer's income and type of assetsold.3. Corporate Income - Retain Current Rate. The Governor proposed Article 37 in 2009-H 5983to eliminate the Business Corporation tax over a five-year period and replace the Corporate MinimumTax with a tiered system according to the corporation's net income. Additionally, the article changes.the maximum jobs development rate reduction for eligible companies as it relates to corporate incometax. His budget includes a revenue loss of $14.5 million in FY 2010 from the reduction of theCorporation Income Tax from 9.0 percent to 7.5 percent, effective January I, 2010. The HouseFinance Committee does not concur with the Governor's proposal and restores the $14.5 million inrevenues for FY 2010.4. Inheritance Tax to
$850,000
and Indexed. The House Finance Committee recommendsincreasing the Rhode Island estate tax exemption amount from $675,000 to $850,000 for any residentor non-resident who dies on or after January I, 2010. Beginning on January I, 2011 and thereafter, theexemption amount will be adjusted by the Consumer Price Index. This reduces revenues by $0.8million. The Governor's FY 2010 budget assumes revenue loss of $1.5 million from increasing theexemption amount to $1.0 million. The House Finance Committee includes $0.7 million morerevenues than included in the Governor's budget.S.
~fllmd
Criminal I:veStieatiou ;;; Increase. The Governor recommends Article 11which increases the fee for Bureau of Criminal Identification background checks from $5 to $25.Currently, the Bureau performs 44,705 checks annually, which generates $223 in revenues. Basedon this activity, the Budget assumes the new fee would generate ,625 per year
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$894,100 inadditional revenues for FY 2010. The House Finance Committee does cur.6. CRMC Recreational it Fee. Since 2001 the Coastal Resources ManagementCouncil as c large 50 for residents and $100 for non-residents to purchase recreational vehiclepermits, which allows the permit holder to access beaches with their vehicles. This generatesapproximately $100,000 annually. The House Finance Committee recommends increasing this fee to$100 for residents and $200 for non-residents, which would generate an additional $100,000 in generalrevenues.7. CRMC Residential Dock Permits. Since 1990, the state has charged $500 for a residentialdock permit application fee. The fees are set and collected by the Coastal Resources ManagementCouncil and are deposited as general revenues. The fee is for a permit which allows a property owner
 
to construct a dock on property in which a home is located. The House Finance Committeerecommends increasing this fee to
$1,500
per application, which would generate additional generalrevenues of 
$55,000
for FY
2010.
8.
CRMC
Shoreline Protection Application Fee. The Coastal Resources Management Councilcharges. a structural shoreline protection application fee to any property owner who wants structuresplaced along the shorelines to protect their upland structures such as a house. Since
1993,
the fee hasbeen
$750
for the initial
100
feet and
$10
for each additional foot. The House Finance Committeerecommends increasing this fee to
$1,500
for the initial
100
feet and
$15
for each additional foot,which would generate an additional
$30,000
of revenue for FY
2010.
9.
DBR
Selected Fees. The House Finance Committee recommends increasing selected feesthroughout the Department of Business Regulation by
20
percent to yield
$1.6
million in additionalrevenues, effective July I,
2009.
The
31
selected fees have not been increased since FY
2000
orearlier. The fees affected are part of the Banking, Securities, Insurance and Commercial Licensing,Racing and Athletics divisions as well as the Boards for Design Professionals.10. Expungements Fee. The House Finance Committee recommends requiring a fee of 
$100
for theprocessing of expungements in order to generate new revenues for FY
2010.
Currently, the Office of the Attorney General processes approximately
12,286
expungements per year free of charge. TheBudget assumes
$1.2
million in new revenues for FY
2010.
11. Food Protection License Fee Increase. The House Finance Committee does not concur withtlle proposal to impose a penalty of 
$100
for late renewals of permits granted for food protectionlicenses. The proposal also includes a civil fine of 
$500
per day for each day that an establishmentoperates with a lapsed or invalid permit. The Governor's budget assumed additional revenues of 
$25,000
for FY
2010
primarily from more facilities being in compliance.12. Land Sales. The Governor originally included
$16.0
million of new revenues from the sale of three parcels of land in the FY
2009
revised budget. He subsequently requested an amendment to shift
$10.0
million of that to the FY
2010
budget. This includes
$6.0
million in revenues from the sale of the Aime Forand property and $4.0 million for the land between Pontiac and Howard Avenue, formerlyslated for the new State Police headquarters to the Rhode Island Housing and Mortgage FinanceCorporation. The
2008
Assembly approved
$16.9
million from Rhode Island Capital Plan funds torenovate the Forand building to be used as the new registry for the Division of Motor Vehicles. If adeveloper were to purchase and renovate the lands, the state would be required to make annual leasepayments for
20
to
30
years. The Assembly did not include any land sale revenue in
2009-H 5019
forFY
2009.
The House Finance Committee does not concur with the Governor's recommendation for FY
2010
and reduces revenues accordingly.13. Mise· Scoop
HRlC.
The House Finance Committee recommends transferring
$1.5
millionfrom the Human Resource Investment Council to the general fund in FY
2010.
Employer payroll taxesfund two restricted receipt accounts, which the Council uses for employment, training, education andeconomic development activities. The Council has an estimated FY
2009
year-end balance of 
$1.8
million, leaving
$0.3
million in the account in addition to any receipts that are collected after thetransfer.14. VLT 24·3. The
2008
Assembly enacted legislation that became law on May
6, 2008
and willsunset on June
3D, 2009
that allows the operation of video lottery games on a twenty-four hour basis onweekends and federally recognized holidays at the Twin River and Newport Grand facilities. The May
2
 
Revenue Estimating Conference estimated that revenues of 
$7.6
million would be generated
if
24-3
operations occurred in FY
2010.
The House Finance Comtfiittee includes
$7.6
million in revenues tobe deposited into the general fund for FY
2010
based on the Administration's indication that it plans toextend the hours administratively.Expenditure ChangesDepartment of Administration15. Budget Office Actuarial Studies. The Budget includes
$89,000
from general revenues forcontractual services with Gabriel, Roeder and Smith to develop valuations of various retiree healthscenarios. The Governor subsequently requested an amendment to remove this expense and indicatedthe studies will not be needed in FY
2010.
The House Finance Committee concurs.16. ,Budget SteblJlldatlon Fund Transfer. The Governor proposed legislation in his revised budgetto appropriate funds from the budget stabilization funds to liquidate the FY
2008
closing deficit and tochange statutes to not repay this in FY
2009
as required, deferring the repayment to FY
2010.
His FY
2010
recommended budget includes
j52.950.4S0
to repay the funds he proposed using from the BudgetStabilization Account to close the FY
200S
deficit. The Assembly did not concur with the Governor'sproposal to borrow from the stabilization fund; therefore, the appropriation to repay the fund in FY
2010
is not needed. The House Finance Committee excludes the funds.17. Budget Stabilization Fund Transfer. The House Finance Committee recommends the transferof 
i20.0"
million from the budget stabilization funds for FY
2009
and includes legislation to repay thatamount over two years and includes
$15.0
million in FY
2010
for the first payment. Current lawrequires that the repayment be made the following fiscal year.18. Capital· Cannon Building. The Capital Budget includes Rhode Island Capital Plan fundsexpenditures of 
$1.1
million to be used through FY
2012
for ongoing repairs amI renovations at theCannon Building, of which
$150,000
is for FY
2009
and
$575,000
is for FY
2010.
The House FinanceCommittee recommends
$70,000
less in FY
2009
to reflect current expenditures and reduces FY
2010
by
$0.3
million to reflect the Department's capital budget request.19. CapitaAffordable Housing. The House Finance Committee provides $2.5 million in FY
2010
from Rhode Island Capital funds for the continuation of the Neighborhood OpportunitiesProgram. The' Housing Resource Commission administers the program, which provides grants or lowinterest loans for the rehabilitation of dilapidated housing units or new construction as well as operatingsubsidies to reduce rents. The Governor's Capital Budget did not assume funding beyond FY
2009.
20. Capital - DOlT Operations Cellter. The approved capital plan includes
$9.0
million in FY
2009
from Rhode Island Capital Plan funds to acquire a new state of the art facility to house the state'scomputer center. The approved plan was to convert the Training School's administrative building intoa new state data center. The Administration indicates that it is currently pursuing other options and hassubmitted a bid for a facility located in Warwick. The House Finance Conunittee shifts
$4.0
millionfrom FY
2009
to FY
2010
based on a revised project schedule.21. Capital - Enyironmental Compliance. The Capital Budget includes $1.5 million from RhodeIsland Capital Plan funds from FY
2009
through FY
2013
for projects that assist state agencies inmaintaining compliance with all state and federal environmental rules and regulations. The Hou eFinance Committee provides a project cost of 
$1.8
million, which reflects a decrease of 
$25,000
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