RI Governor’s Proposed FY 2016 Budget Emphasizes Innovation

Late last week, Rhode Island Gov. Gina Raimondo’s released her proposed $8.6 billion FY2016 budget proposal.   The budget focuses on three guiding principles: building skills, attracting entrepreneurs and investment, and fostering innovation. Raimondo, who had previously served as the state’s treasurer and founded Rhode Island’s first venture capital fund, prioritized economic development and released a detailed jobs plan during her election campaign, much of which is reflected in the budget. With the goal of building skills, Raimondo’s budget proposes:

• A $35.5 million increase in K-12 education;
• Establishes a loan forgiveness program for graduates that stay in Rhode Island and work in priority fields;
• Aligns job training with industry needs;
• Restructures existing higher education grant programs to create a last-dollar scholarship program for Rhode Island students; and,
• Invests in Prepare RI, a dual enrollment program that makes earning degrees or industry certification more affordable and attainable.

The proposed budget also would eliminate 27 licensing requirements and other regulatory burdens and fees, such as a commercial sales tax on energy. Perhaps most relevant to TBED, Gov. Raimondo also proposes creating a set of economic development initiatives, funded through $44.5 million in general revenue and housed within the new Office of the Secretary of Commerce, to help foster an innovation economy. Examples of these proposed initiatives include:

• $5.2 million for the Small Business Assistance Program to help expand access to capital for small and growing businesses in Rhode Island;
• $1.8 million for the Anchor Institution Tax Credits program to incentivize the state’s large and most innovative businesses to attract suppliers, affiliates, and customer companies to Rhode Island;
• $500,000 for the Innovation Initiative, providing funds to organizations that offer technical assistance, space, and access to capital to companies in important industry sectors;
• $750,000 for a Cluster Grants program to help catalyze stronger partnerships within the state’s key industry clusters; and,
• $25 million for an I-195 development fund to support real estate developments with the potential to bring jobs and opportunities to Rhode Island, with a caveat that the funds cannot be used for a stadium or sports complex.

Additional proposals related to innovation that are funded through the Office of Commerce include $500,000 for the state’s SBIR match program, and $500,000 for a competitive grant program that allows small and medium sized businesses to earn between $5,000 and $50,000 vouchers for research, technology, and engineering assistance from colleges, universities, and other institutions.

The governor’s proposals have won strong endorsement from economists, pro-government groups, and some business organizations, though local tourism groups, conservative organizations, hospitals, and nursing homes have been less supportive, according to the Providence Journal.