Rhode Island Gov. Gina Raimondo proposed a $9.3 billion budget that includes $10 million for two years of free tuition at state public colleges and strategic spending for economic growth and innovation.
She also called for reducing assessed motor vehicle values by 30%.
The spending plan, she said Thursday, closes an estimated deficit of $66.2 million, down from the projected FY18 budget of $184.5 million. The budget is up 3.5% from the plan the General Assembly approved last year.
Raimondo, a Democrat presenting her third budget to the Democratic-controlled legislature, said an initiative to enforce the Internet sales tax and a 50-cent hike in the cigarette tax would bring in about $43.4 million in revenue and pay for the new initiative.
Speaking to lawmakers two days earlier at the State Capitol in Providence, Raimondo touted her free-tuition initiative, which she said would help boost the state's sagging economy.
"The reality is most jobs being created now in Rhode Island will require some degree or certificate beyond a high school diploma," she said.
Rhode Island's unemployment rate for December was 5%, down from 5.3% a month earlier yet still above the nation's 4.7% rate. The state lost 1,000 jobs in December, the Rhode Island Department of Labor and Training announced Thursday.
"Our economy has changed in ways that are causing real challenges," Raimondo said Thursday. "How we meet these challenges will determine our future."
Under her plan, called Rhode Island's Promise, in-state students who graduate on time from the Community College of Rhode Island, Rhode Island College and the University of Rhode Island would get two free years, beginning with high school seniors who graduate this spring.
Cranston Mayor Allan Fung, a Republican who lost to Raimondo in the 2014 gubernatorial election, questioned whether the state can afford the move.
"The governor's taxpayer funded tuition proposal, while noble in cause, is just another promise that the state may not be in position to make right now," Fung said in a statement.
Raimondo's car-tax proposal puts her at odds with one by House Speaker Nicholas Mattiello, D-Cranston, who wants to phase out the tax over five years and replace what cities and towns now collect – about $215 million – with state funds.
The state, said Raimondo, will not have to make a 38 Studios-related debt payment related payment this year because money from out-of-court settlements related to the bond financing fiasco involving former baseball pitcher Curt Schilling's video-game company will cover the $15.7 million.
38 Studios went bankrupt in 2012, and bond-rating agencies have since emphasized that the state's moral obligation pledge to the original economic development loan was tantamount to general obligation debt.
Moody's Investors Service rates Rhode Island's general obligation bonds Aa2. Fitch Ratings and S&P Global Ratings assign AA ratings. All three assign stable outlooks.
The budget includes $10.1 million from one-time debt-service savings to resupply the I-195 Development Fund, designed to enhance development and attract anchor businesses to land near downtown Providence vacated by the relocation of Interstate 195.
Republicans criticized Raimondo's administration for excessive spending. "[Rhode Islanders] are fed up with a broken government that spends way too much, tales way too much and refuses to be held accountable," said House Minority Leader Patricia Morgan, R-West Warwick.
Democrats hold a 64-10 advantage in the House of Representatives and a 33-5 edge in the Senate. Each chamber has one independent.