Taxes and Fees

Most of the Governor’s recommended tax reduction package was rejected by the General Assembly. The Governor’s requested changes included a gradual elimination of the corporate income tax, changes to the inheritance tax and changes to the personal income tax and tax credits. Below is a breakdown of some of the tax items that appear in the final version of the budget.

Capital Gains Tax: The General Assembly budget recommends taxing capital gains as ordinary income. This change is expected to result in $23.6M in additional revenue. This provision is contained in Article 16.

Corporate Income Tax: The General Assembly did not concur with the Governor’s proposal to gradually eliminate the business corporation income tax and instead restores the $14.5M in corporate tax revenue for FY2010. This provision is contained in Article 16.

Inheritance Tax: House Finance budget raises the inheritance tax exemption from the current level of $675,000 to $850,000. This results in a revenue reduction of $0.8 million. The Governor had requested raising the exemption to $1.0 million. This provision is included in Article 16.

Health and Human Services

Office of the Health Insurance Commissioner: The House Finance originally recommended the elimination of the office and repeal of the statute creating the office and outlining its duties, for a savings of $650,000. After an outpouring of opposition from a number of advocacy groups and other state officials, the House removed this proposal and restored the OHIC’s funding in a floor amendment.

Rhode Island Pharmaceutical Assistance for the Elderly (RIPAE): The General Assembly fully restored funding for the program for FY2010. The Governor had proposed eliminating the program entirely with an expected savings of $855,000.

RIte Care Dental for Adults: The General Assembly fully funded the program for FY2010. The Governor had proposed eliminating dental coverage for RIte care parents, with an expected savings of $1.1 million.

Diagnosis Related Groups (DRG): Article 23, Sections 6-8 will implement a new reimbursement system for hospitals. The implementation of this new system is delayed until March 30, 2010. The budget assumes savings for $2.5 million in FY 2010.

Elimination of RIte Care Co-Pay: The General Assembly recommends the following regarding co-payments for RIte Care beneficiaries: 1) Repeal co-share medical premium requirement for individuals between 133-150% of the Federal Poverty Level (FPL); 2) Repeal co-share medical premium increase that was passed by the 2008 General Assembly for individuals between 150%-250% of the FPL. Both of these changes are retroactive to May 31, 2009. The roll-back of these co-share provisions is necessary to fully comply with the Medicaid eligibility maintenance of effort provisions of the American Recovery and Reinvestment Act (ARRA). The House Finance Committee restores a total of $3.5 million in revenue for FY 2010 to implement these two changes.

RIte Care Buy-in for Pregnant Women: The General Assembly recommends fully funding the program for FY2010. The governor had proposed eliminating coverage for pregnant women from 250% – 350% of the federal poverty level, with an expected savings of $235,000.

Global Medicaid Waiver: The General Assembly includes savings of $28.3 million from the implementation of the Global Medicaid Waiver. These savings come from a number of initiatives, including various changes to the state’s long term care system.

An overview of some of the changes to the Governor’s original proposal can be found below.

Taxes and Fees

Most of the Governor’s recommended tax reduction package was rejected by the General Assembly. The Governor’s requested changes included a gradual elimination of the corporate income tax, changes to the inheritance tax and changes to the personal income tax and tax credits. Below is a breakdown of some of the tax items that appear in the final version of the budget.

Capital Gains Tax: The General Assembly budget recommends taxing capital gains as ordinary income. This change is expected to result in $23.6M in additional revenue. This provision is contained in Article 16.

Corporate Income Tax: The General Assembly did not concur with the Governor’s proposal to gradually eliminate the business corporation income tax and instead restores the $14.5M in corporate tax revenue for FY2010. This provision is contained in Article 16.

Inheritance Tax: House Finance budget raises the inheritance tax exemption from the current level of $675,000 to $850,000. This results in a revenue reduction of $0.8 million. The Governor had requested raising the exemption to $1.0 million. This provision is included in Article 16.

Health and Human Services

Office of the Health Insurance Commissioner: The House Finance originally recommended the elimination of the office and repeal of the statute creating the office and outlining its duties, for a savings of $650,000. After an outpouring of opposition from a number of advocacy groups and other state officials, the House removed this proposal and restored the OHIC’s funding in a floor amendment.

Rhode Island Pharmaceutical Assistance for the Elderly (RIPAE): The General Assembly fully restored funding for the program for FY2010. The Governor had proposed eliminating the program entirely with an expected savings of $855,000.

RIte Care Dental for Adults: The General Assembly fully funded the program for FY2010. The Governor had proposed eliminating dental coverage for RIte care parents, with an expected savings of $1.1 million.

Diagnosis Related Groups (DRG): Article 23, Sections 6-8 will implement a new reimbursement system for hospitals. The implementation of this new system is delayed until March 30, 2010. The budget assumes savings for $2.5 million in FY 2010.

Elimination of RIte Care Co-Pay: The General Assembly recommends the following regarding co-payments for RIte Care beneficiaries: 1) Repeal co-share medical premium requirement for individuals between 133-150% of the Federal Poverty Level (FPL); 2) Repeal co-share medical premium increase that was passed by the 2008 General Assembly for individuals between 150%-250% of the FPL. Both of these changes are retroactive to May 31, 2009. The roll-back of these co-share provisions is necessary to fully comply with the Medicaid eligibility maintenance of effort provisions of the American Recovery and Reinvestment Act (ARRA). The House Finance Committee restores a total of $3.5 million in revenue for FY 2010 to implement these two changes.

RIte Care Buy-in for Pregnant Women: The General Assembly recommends fully funding the program for FY2010. The governor had proposed eliminating coverage for pregnant women from 250% – 350% of the federal poverty level, with an expected savings of $235,000.

Global Medicaid Waiver: The General Assembly includes savings of $28.3 million from the implementation of the Global Medicaid Waiver. These savings come from a number of initiatives, including various changes to the state’s long term care system.