Time to look back on administration’s past promises as McKee touts new spending plan

PROVIDENCE – It’s been a busy couple of months for Gov. Daniel McKee filled with the forward-looking, agenda-setting whirlwind that comes with giving an inaugural address, State of the State address and proposing a budget. Across both speeches and the promotion of his proposed budget, McKee has made his priorities for Fiscal Year 2024 clear: raising incomes, improving education and boosting health care.

As McKee tours the state promoting his proposed budget, the General Assembly begins the six-month process of turning that proposal into next year’s budget bill. But how well did the state government fulfill its promises last year? To find out, The Call compared McKee’s 2022 State of the State address, his proposed budget for FY23, the final version of the budget bill signed into law in June and several public documents and open records to see how policy priorities carried across the entire process.

Similar to this year, McKee’s 2022 State of the State focused on three main policy goals: building more housing, more subsidies for childcare and channeling financial aid to small businesses.

Housing

Shortly after giving his State of the State address, McKee announced a proposal to direct $250 million of federal American Rescue Plan Act funds toward housing.

“The proposal that I’ll send to the General Assembly will not only create and preserve thousands of units of housing, but it will also transform blighted properties, strengthen communities, and create good-paying construction jobs in the process,” McKee said in his address. “How can we expect our sons and daughters to stay in Rhode Island if they don’t have housing they can afford to live in?”

Of the seven components included in McKee’s housing proposal, only one, $50 million for down payment assistance, was cited specifically in his speech. Other components included $90 million for the development of affordable housing, a $25 million site acquisition grant program, $20 million to support workforce housing and over $25 million for homelessness assistance and increasing shelter capacity.

Though the final budget bill included all seven proposals, the amounts appropriated to each were reduced. Taken all together, McKee housing proposal was downgraded by over $80 million for Fiscal Year 2023. Some programs, however, were funded for one or more additional years, including the down-payment assistance, affordable housing development, homelessness assistance and workforce housing.

But there are many steps between appropriating the money and constructing housing. Programs overseen by the quasi-public agency Rhode Island Housing – including the development of affordable housing, site acquisition and community revitalization – award funds to specific projects, but pay on a reimbursement basis per federal guidelines.

According to the latest update to the RIHousing Board of Commissioners from mid-January, of the $20 million set aside for the development of affordable housing, over $14.5 million (23% of available funds) has been committed to projects and $2.5 million of that has been expended. So far, that money has financed 13 developments, of which one has been completed and three are under construction, totaling 485 units of affordable housing, according to RIHousing documents.

Christine Hunsinger, chief strategy and innovation officer, confirmed that the organization is on track to commit all development funds by the end of this fiscal year in June. In order to help speed up the development process, RIHousing rolled most of its programs, including those funded with federal pandemic money, into a single request for proposal, significantly cutting down the time it takes to close a deal with developers, Hunsinger said.

The site acquisition program has also been successful under this measure; all $15 million of the available funds for the current and last fiscal years have been committed, and nearly $8.5 million has been expended, according to RIHousing documents. In fact, the program has been suspended until next year’s funds become available. In the meantime, the available funds have supported 25 properties, projected to create 570 units of affordable housing.

Other programs, like the downpayment assistance program, just started this year despite having appropriated funds last year. Hunsigner said RIHousing has been offering its own various downpayment assistance programs for years, including last year while the state’s ARPA-funded program was still awaiting final approval.

Programs outside RIHousing, however, seem to have gotten off to a slower start, especially those intended to help people experiencing homelessness in the state.

Less than $500,000 of the $15 million set aside in the General Assembly’s budget bill for homelessness infrastructure and housing instability assistance has been spent. It’s worth noting that the fiscal year is only half-over and concludes at the end of June.

The relatively small portion of the allocated funds that have been spent thus far has been the subject of criticism, much of which has centered on former Housing Secretary Josh Saal. Saal served as the first secretary of housing after the position was elevated from the deputy secretary level, and then resigned this month.

He was tasked with providing the General Assembly a housing organization report in November and an integrated housing report in December, in addition to overseeing the newly created Department of Housing that went into effect this year. Both reports were submitted late, though the November report received an extension, and were described as “inadequate” by House Speaker Jospeh Shekarchi.

“I am disappointed with the lack of progress that was made under Secretary Saal’s leadership and the inadequate reports he recently submitted to the legislature,” Shekarchi said in a January statement. “The General Assembly committed unprecedented resources to address affordable housing and homelessness in the last two budgets and there has been very little funding spent so far.”

The December integrated housing report, which is available as a PDF on the Office of Housing and Community Development website, relies heavily on U.S. Census and American Community Survey data or state data that was already publicly available. Of the 32 metrics required by law to be included in the report, five were left out due to “insufficient data” and two were partially completed. The recommendation section noted “recommendations are forthcoming and will be included in the Statewide Housing Plan.”

McKee announced in mid-January that former Secretary of Commerce Stefan Pryor will take over for Saal as the housing secretary, and will also be nominated to serve as chairman of the Board of RIHousing.

Childcare

McKee’s 2022 State of the State included three major proposals that fell under expanding childcare. The first was to “cover all kids in Medicaid,” specifically those who were disqualified due to their immigration status.

McKee’s budget proposed spending $1.9 million in general revenues to extend coverage to those children who would otherwise be ineligible, estimated to be about 3,000 statewide, according to a legislative press release. That proposal was passed in the FY23 budget bill, sponsored in the General Assembly as the “Cover All Kids” proposal by Rep. David Morales (D-Providence) and Sen. Sandra Cano (D-Pawtucket). In addition to setting aside about $2 million for benefits and implementation, the bill also allows the use of state funds to pay for coverage if federal funds are not available.

Statewide enrollment data for “RIte Care” and “RIte track,” the Medicaid-managed programs for children in Rhode Island, is released by fiscal year and has not been undated for FY23 yet, which ends in July.

McKee also said in his State of the State and proposed budget that Medicaid coverage should be extended to women from 60 days postpartum to 12 months, regardless of immigration status. He proposed a $6.6 million increase from all funding sources to cover the increase. That provision was included in the FY23 budget bill, directing the Department of Health and Human services to use state funds if federal funds were insufficient to cover the extension.

Increasing the Child Care Assistance Program rates to make more families eligible was another goal that the Governor and the General Assembly were able to accomplish last year. The rate was raised to expand eligibility to families with incomes at or below 200% of the federal poverty level, rather than the previous rate of 180% of the federal poverty level. The assistance is available to families who meet the eligibility income level and require childcare in order to work, attend a job-training program or enroll in a public higher education program.

In addition to those policy changes, McKee also proposed setting aside $37.4 million to use for retention bonuses for child care providers and $600,000 to offer start-up grants and technical assistance to 200 new Family Child Care providers.

Of the roughly $20 million of federal pandemic money allocated for child care support, defined in the budget bill as retention bonuses, over $13 million has been spent, according to the pandemic recovery portal. Additionally, nearly $200,000 in $2,000 grants have been doled out under the Family Provider Support program, which helps launch new child care providers.

Small Businesses

The third policy goal McKee highlighted in his State of the State and budget proposal was aiding small businesses, which were still recovering from the widespread lockdowns of 2020 and 2021, as part of a broader economic recovery initiative.

The most straightforward proposal was to fund direct grants to small businesses, for which McKee proposed $45 million. As part of the RI Rebounds initiative, which allocated a significant portion of the state’s ARPA funds, over $30 million was set aside for small business direct grants, technical assistance and public health capital improvements. Just under half of the funds allocated for these three programs have been expended, according to the state’s pandemic recovery portal.

The largest share of the expended funds, $12.3 million went into the direct grants, administered by the quasi-public agency RI Commerce.

“There is no doubt that these grants will be a lifeline for our struggling small businesses, but we can do more to structurally improve our business climate overall,” McKee said in his 2022 State of the State address. “This year, in my budget request, we’ll be proposing a separate small business budget article with a plan to make a real difference.”

While the final budget bill did not contain a separate small business article, several of McKee’s proposals for that article were still contained in the legislation. Among them was allowing cities and towns to exempt a portion of business property from the tangible tax (contained in the article regarding taxation, and subject to approval by the local city or town council), eliminating the sunset provision to make alcohol to-go permanent (passed as a separate bill early February) and creating a taxpayer steward position in the Department of Revenue to help individuals and small businesses “navigate the taxation process” (filled by an existing Division of Taxation employee).

McKee also proposed allocating $40 million for the Department of Labor and Training’s Real Jobs Rhode Island program, a workforce development program. The General Assembly appropriated $10 million for the next two fiscal years, of which about $217,000 has been spent, according to the pandemic recovery portal.

One of McKee’s proposals that didn’t pass was lowering the corporate minimum tax from $400 to $375, but he was able to eliminate the motor vehicle excise tax, better known as the car tax.

 

Follow Stella Lorence on Twitter @slorence3.

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