Smith Hill to Capitol Hill: Society's Government Update March 29, 2019


Welcome to another edition of our Society's Statehouse Update, keeping you informed of the activities of local, state and federal government "on the hills" from Smith Hill to Capitol Hill!

State Government & RI Legislature Activity: The RI Society of CPAs, with our member partners in the RI Business Coalition, has been monitoring the Governor’s budget blueprint and numerous proposed bills at the General Assembly in recent weeks. Here is a snapshot of what we have been tracking and positions we are taking:

Articles in Governor Raimondo’s Proposed Budget:
Medicaid Tax on Employers: Budget Article 16: We joined in opposition to a proposal from Governor Raimondo to place a steep fee on businesses for employees who carry Medicaid as their health insurance coverage. The Governor’s proposal, targeted at larger companies with 300 employees or more, would force those businesses to pay a fee equivalent to 10-percent of a worker’s salary if that employee is on a public health plan, or Medicaid. The Governor says the largest group of companies in this category in RI are supermarkets and large retail chain convenience stores that generally employ large numbers of low-income minimum wage workers who rely on Medicaid for health coverage. But businesses are concerned that if the state’s revenue projections from the proposed fee fall short, the Governor will seek the same fee from businesses with smaller numbers of employees. The Business Coalition also points out since employers cannot force an employee to consider taking the company’s health plan, the legislation would force businesses to absorb large employee fee costs. The Governor is projecting the new tax would generate $15.6 million to the state’s budget next year and nearly $20 million per year after that. In a testimony letter from RISCPA President Melissa Travis to House Finance Committee Chair Marvin Abney, Melissa stated “We are disappointed there was no attempt to formally study the issue or meet with the business community. We are concerned other options have not been explored to find a sustainable path for the state’s Medicaid program.” We have asked the Budget Article not go forward.

Minimum Wage Hike: Budget Article 13: We joined in letters of opposition to the Governor’s budget proposal to increase Rhode Island’s minimum wage from the current $10.50/hr. to $11.10/hr. starting January 2020. We oppose this legislation for numerous reasons, including small businesses in the state are negatively impacted by wage hikes, especially as other costs of employees and labor continue to multiply for employers. Additionally, RI’s hourly wage, already the 10th highest in the nation, has been increased every single year since 2013 (except for holding it steady in 2017). The consecutive wage hikes have already placed cost burdens on RI businesses that have forced many to either drastically reduce their workforce or resort to part time employees to absorb the increasing wage costs. If the Governor’s proposed wage hike were to pass, it would place RI at 4th highest wage nationally, tied with New York and Colorado. Only the states of Massachusetts, California and Washington state, with much stronger economies, have a higher minimum at $12.00/hour. RI businesses are not positioned to absorb this proposed hike.

In recent days we submitted testimony letters on legislation pertaining to:
Transparency Bill: Online Data Transparency & Privacy Protection Bills: we joined the RI Business Coalition in opposition to a package of privacy protection and transparency bills. Although the goal of protecting consumers privacy from data brokers with malicious intent is understandable, we are in opposition because the bills, in their current form, could end up imposing unknown new fee costs on a wide array of industries which aggregate data in multiple ways for legitimate business operations. We stated among the unintended consequences that could be created by passage of these bills could be potential lawsuits against the state regarding health privacy (HIPAA), state cybersecurity insurance and existing vendor contracts. The bills are misguided and we respectfully asked they not be advanced.

Tax Bills:
H 5399: Income Tax Brackets: We oppose this bill. It proposes to add three new income tax brackets to the RI state tax statute, and by doing so, would result in increases to the marginal tax rates. Firmly opposing this bill.
S 74: Sales and Use Tax, Enforcement and Collection: We support this bill which would enact a 10-year statute of limitations on any assessment of tax due and payable, or commencement of any collection action by the tax administrator for taxes owed in certain categories.
Senate Bills: S-23, S-51, S-52: Relating to Taxation-Levy and Assessment of Local Taxes: We sent letters of opposition on all three bills which pertain to proposed hikes in tax levied against residential properties which participate in certain federal housing programs. Letters were addressed to Senate Finance Committee Chair William Conley.

Update on Pass-through Proposal: We are excited that in recent days the office of House Majority Leader Joseph Shekarchi has notified us that a hearing on the Pass-Through Entity Tax Bill, H-5576, crafted with the advocacy of Cap Willey and Randy Dittmar, is being scheduled before the House Finance Committee in late April.

RIPEC’S Education Governance Proposal: The RI Public Expenditure Council (RIPEC) issued a detailed education reform plan in recent weeks that has been widely hailed for providing a smart and comprehensive roadmap for improving RI’s challenged statewide school system.
The proposal revolves around two central pillars: creating a system-wide Curriculum Alignment for Math & English and turning to a School-Based Management Model. The curriculum alignment would phase out the state’s current approach where differing curriculum blueprints can vary greatly between the state’s suburban districts and urban core, leading to uneven outcomes in GPA’s and standardized test scores.
The school-based management model would give much more local school control to principals and superintendents for staff hiring and classroom assignment and decrease the current system where local school committees generally carry control over hiring and many other management decisions. RIPEC ‘s recommendations stem from a detailed analysis that began with reviewing the school governance system and curriculum program of Massachusetts in contrast to Rhode Island. The analysis examined the striking performance gap between students in both states that was reflected on the 2018 standardized tests, the MCAS, and Rhode Island’s RICAS, administered to grades 3-8.
Here is a snapshot of the RIPEC findings:
On the English/ELA portion:
In MA, 51% of students overall met or exceeded expectations
In RI, 34% met or exceeded
On Math portion:
In MA: 48% met or exceeded
In RI: 27% met or exceeded

RIPEC found similar test outcomes for the two states on the SAT exam administered to high school students. A note on demographics: Although some differences in demographics is evident at the statewide level, RIPEC reported even when demographically-similar individual districts are measured, significant performance gaps persist. The RIPEC study is being evaluated this spring. RISCPA commends RIPEC for issuing such a detailed and important analysis on the state’s often troubled school system. 

Washington, DC: After an exhaustive two-year investigation consuming hundreds of interviews and producing dozens of indictments, the Mueller Report was completed and sent to the Attorney General on 3.22.19 with a conclusion that found President Trump and his campaign did not collude with the Russian government to interfere with the 2016 election. The Report also did not conclude Trump obstructed justice in connection with the probe, but also stated it could not exonerate him. President Trump’s reaction to the report was to say he felt “totally exonerated” and it was clear there was “no collusion and no obstruction” and that he felt it was a “totally illegal takedown that failed” and he regrets the country and his presidency was put through this.

Stay Tuned!


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