- Associated Press - Thursday, January 19, 2017

PROVIDENCE, R.I. (AP) - Rhode Island Gov. Gina Raimondo released a $9.25 billion budget plan Thursday that relies on new sales tax revenue from online retailers, such as Amazon, and cuts to Medicaid programs.

The Democrat submitted the plan to the General Assembly, which must now review the proposals and present its own plan before the 2018 fiscal year that begins in July.

Raimondo’s recommended budget is about 3.5 percent higher than the one enacted last summer, and the plan’s $3.8 billion general revenue budget is 3 percent higher than last year’s.

It would close an expected $66.2 million shortfall but also include major new spending initiatives that Raimondo outlined in her State of the State speech on Tuesday. Those include a cut to municipal car taxes that are widely unpopular and considered among the nation’s highest, and a free tuition program for in-state students at public colleges.

Here are some highlights.

AMAZON TAXES

The Raimondo administration said a projected revenue boost of nearly $35 million from online sales taxes will help to reduce the state’s structural deficit. The state doesn’t reveal the amount of sales taxes collected by any one company but Seattle-based technology giant Amazon recently announced - after years of resistance - that it will voluntarily begin collecting the state’s 7-percent sales tax from online shoppers for the first time on Feb. 1. Raimondo is also proposing legislation that would compel other online retailers that don’t collect sales taxes to notify shoppers that the taxes are owed.

“You can either do the right thing, like Amazon is doing,” said Department of Revenue director Robert Hull, or send customers a pop-up notice whenever they make an internet purchase, plus a once-a-year tax mailing to certain customers.

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MEDICAID

State health officials said $46.3 million in projected health care savings in the coming year are part of a broader move away from costly hospitalizations and toward in-home and community-based care. Among the biggest savings in the state’s Medicaid program are from rate cuts and administrative fee cuts paid to hospitals and nursing home providers. Raimondo’s budget doesn’t account for possible cutbacks that could happen in the incoming presidential administration of Republican Donald Trump.

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CAR TAXES

The plan includes cutting municipal car taxes by 30 percent next year by reimbursing cities and towns $58 million for the lost revenue, though the state wouldn’t have to spend that money until the 2019 fiscal year. The plan uses what’s described as the “average trade-in value” of a vehicle, or about 70 percent of the valuation currently used to levy the tax. The car tax cut aligns Raimondo with the top priority of Democratic House Speaker Nicholas Mattiello, but he wants to go further by fully phasing out car taxes over the next five years.

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FREE TUITION

The budget proposes $10 million for the first year of a new free college tuition program, which would start for in-state students at the Community College of Rhode Island. The program guaranteeing two years of free tuition would later expand to $30 million a year and cover students in their third and fourth years at Rhode Island College and the University of Rhode Island.

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BUS FARES

Raimondo proposes a cushion for some low-income elderly or disabled bus passengers who are losing out on free rides when the Rhode Island Public Transit Authority stops offering no-fare passes on Feb. 1. A new $300,000 pilot program would give free 10-trip tickets to some passengers.

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CIGARETTE TAX

The governor proposes increasing the cigarette tax to $4.25 a pack from the current $3.75. The increase would generate $8.7 million, about $2.5 million of which would go to outdoor recreation initiatives. A similar proposal last year didn’t make it through the legislature.

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