Budget Address February 2, 2016 Good evening, Speaker Mattiello, Senate President Paiva Weed, Members of the General Assembly, distinguished guests, my husband Andy, and my fellow Rhode Islanders: We gather this evening for an annual address that is as much about honoring a tradition of cooperation between the legislature and the governor as it is about setting priorities and crafting a state budget. We’re at a time in America when the angriest among us often have the loudest voices, and politicians seem like they’re always shouting past each other. Here in Rhode Island, though, we are showing that we can forge consensus, and achieve progress through collaboration and compromise. To the members of this Assembly, thank you for your partnership, and commitment to Rhode Island -- because of it we are having a real impact on our neighbors. Most Sundays, my family and I go grocery shopping after Mass. We were recently at Stop & Shop on Branch Avenue, when a young man -- maybe 35 -- came up to talk to me. That’s not unusual -- I often do more talking than shopping. He looked like he’d just come from Church, too, and he told me about what a tough time he was having. He didn’t mind working hard -- in fact he wanted to work hard. But he said he just couldn’t get enough hours to stay ahead of his bills. I think about him -- and countless others just like him -- every day. When I wake up in the morning, and when I put my kids to bed at night, my mind is on getting people back to work, growing our economy, and ensuring that everyone can “make it in Rhode Island.” I know that many Rhode Islanders are frustrated. We’re frustrated because government doesn’t work as well as it should… … because there are too many potholes and crumbling bridges… … and too many of our friends can’t find work, or are struggling with wages that aren’t increasing as fast as their bills. But the good news is that we are making progress and our state is getting stronger by the day. Last year: • our housing market had the strongest year since 2004; • our economy created more than 8,000 jobs, the most jobs we’ve created in a single year since 2000; • and our unemployment rate dropped more than any other state in the nation. Let me say that again: Rhode Island had a larger drop in its unemployment rate last year than any other state in the nation -- to 5.1 percent. We might be a small state, but that’s a big deal. Another story of our progress lies just a few blocks from here. A couple of weeks ago we signed a contract to move forward with a major life sciences complex on the 195 land. I’ve worked hard on this…meeting with executives to persuade them that Rhode Island was the place to invest. As you know, I’ll go anywhere, or meet with anyone, to put people to work in Rhode Island. It’s not a done deal yet, but we are closer than ever to realizing our vision of establishing a magnet of innovation, entrepreneurship, and investment on the 195 land. This project has the potential to create hundreds of good jobs for Rhode Island families and be a foundation upon which we build a stronger economy. A big part of the reason this is happening is because of the economic development tools the General Assembly passed last year. That’s the kind of partnership that works for all of Rhode Island. We’re hard at work utilizing those tools to create jobs for Rhode Islanders. Greystone is a local manufacturer. The company has been manufacturing components for the automotive and aerospace industries since 1932. It also has a facility in Virginia, and was considering an expansion there instead of here. We’ve heard this story before haven’t we? A local business choosing to grow . . . only somewhere else. But this time the story has a different ending. Because of the job-creating tools this legislature passed last year, we were able to convince Greystone to expand in Rhode Island, instead of in Virginia. We offered targeted tax benefits, and now 25 good-paying, advanced manufacturing jobs are being created in Rhode Island. That means 25 more Rhode Islanders will proudly be able to go off to work in the morning, and come home at night feeling a little more secure. On the one hand, this is just 25 jobs, and Greystone is just one company. But it shows early results that the economic development tools are working. In the last month, our tools have helped 3 major real estate projects advance, and we’ve awarded 11 innovation vouchers to support partnerships between businesses and universities. Whether it’s transformative projects like Wexford -- or smaller wins like Greystone -- together, we will rebuild this economy one good job at a time. And, while we’re at it, let’s reject the politics of procrastination and pass RhodeWorks. Rebuilding our crumbling roads and bridges is essential to attracting great companies, and we’ll put thousands of Rhode Islanders to work in the process. Thank you Speaker and Senate President for moving this forward. We’ve also made progress in helping hard working Rhode Islanders put a little more money in their pockets. And working together again, we can do even more: We expanded the Earned Income Tax Credit last year so families could keep more of what they earn. I propose we expand it once again and help more than 85,000 taxpayers keep a little more of their hard earned income. We increased the minimum wage last year, giving 40,000 Rhode Islanders a raise. Tonight, I’m asking you to raise it a little more to $10.10. No one who works full time should have to raise their family in poverty. And thanks to Speaker Mattiello’s leadership -- we reduced the taxes seniors pay on their social security benefits. My mom’s here tonight -- she especially likes this one. I’m excited about the progress we’ve made in just one year. But we must keep going. The global economy is changing faster than ever before. Our job is to ensure that Rhode Islanders aren’t left behind. To position our state for success by building a stronger economy that produces jobs that pay. To do this, our economy has to be based on advanced industries. Industries that are driven by technology and research and development, and that employ people with technical skills. Nationally, advanced industries are expanding much faster than the economy as a whole. And these industries are marked by high wage jobs at all levels. In 2013, the average advanced industry employee earned $90,000. Many of these jobs don’t require a 4-year college degree, but they do require advanced skills. Skills that are within the grasp of anyone willing to reach for them. It’s pretty simple: advanced industry jobs create high wages and economic growth. Now, the good news, is that we have great strengths in many advanced industries, such as defense, IT services, and biomedical innovation. The bad news is that over the past 30 years, employment in these industries fell at a faster rate in Rhode Island than in any other state in the nation. It’s no surprise then that -- in the last decade -- our average family income actually went down. It’s clear: if we want to grow high wage jobs in Rhode Island, we need to skate to where the puck will be. We need our people to have skills that matter, and jobs that pay. To create these high-paying jobs in Rhode Island, first we need to encourage our businesses to invest even more in research and development and to partner with our great colleges and universities. Every day businesses are investing new, cool products – I want them doing that here in Rhode Island So, tonight, I propose a major expansion of our Research & Development tax credit, which will encourage people to develop and to make new, cutting edge products in Rhode Island. R&D boosts economic growth. Leading experts believe that the R&D credit is one of the strongest tools to drive the creation of more American jobs. Jobs we need in Rhode Island. I am also proposing a statewide competition funded by a bond initiative to build an innovation campus in Rhode Island. We will ask universities like URI to partner with businesses to create a place where researchers can work alongside business people to turn their inventions into new products, services, businesses, and -- most importantly -- jobs. A great model is the International Center for Automotive Research in South Carolina. There, the State funded a partnership between BMW and Clemson University that has helped create thousands of jobs in the region – good-paying jobs at every level, from entry-level technicians to higher-paid managers. Over a dozen companies moved to access the talent and technology produced there. If South Carolina can do this, so can we. Our families deserve these high wage jobs. Let’s work together to make this happen for Rhode Island. Another way to attract new businesses is to stop the brain drain, and keep more of our talented kids here. Last year -- working with Rep. Blazejewski and Sen. Pearson -- we created the Wavemaker fellowship to help repay student loans for college graduates who stay in Rhode Island. Tonight, I propose we expand that program so that anyone who graduates from a Rhode Island university -- with a B+ average in a science or technology field -- and who stays in Rhode Island in a STEAM job -- will get help paying back their student loans. These are just some of the things we can do together to build an environment where 21st century businesses want to be. Where people have skills that matter and jobs that pay. Recently Electric Boat announced that they will add thousands of new jobs in Rhode Island in the years ahead. But the company also expressed concern about finding enough trained workers here to fill those positions. It just confirms what we already know: modern businesses value access to skilled talent above almost anything else. Soon, 70 percent of jobs in Rhode Island will require some form of post-secondary education. But, only 40 percent of Rhode Islanders have a post-secondary degree or credential. That has to change. Creating a pipeline of educated and skilled workers is one of the most important things we can do over the long-term to attract businesses to Rhode Island. Working together over the last year we’ve made huge progress. We made college more affordable for more families. We launched PrepareRI and made it possible for high school students to take college classes for free. It’s helping students like Katherine Carrillo, a senior at Central Falls High School. Katherine works part-time to help her family, plays soccer, and is taking four college courses. When she goes to college, these credits will transfer, making it easier for her to afford college, and to graduate on time. We also created the Rhode Island Promise Scholarship Fund, which has made it possible for 6,000 students to attend college in Rhode Island. That’s six thousand lives changed forever. One of those students is Genesis Sanchez Tavarez, a junior at Rhode Island College, here with us tonight. She was working three jobs while also going to school. She got a Rhode Island Promise scholarship, now she only works one job, and can focus more on school. We’re proud of you Genesis! Keep going. The budget I present tonight continues funding for this scholarship program, and it also ensures that we won’t have to raise tuition at URI, RIC, or CCRI. We’re rebuilding our economy, and trying to get more people to go to college. This would be the worst time to jack up the price tag. But it’s not just our colleges and universities -- we have to promote lifelong learning, and that means continuing to emphasize workforce development. With our “Real Jobs Rhode Island” initiative, we’ve made major programs on job training. We’ve put employers in the driver’s seat -- and are letting them design the training – so that we prepare people for jobs that are available now. In the last year alone, we’ve already engaged nearly 200 employers who are working with us to train 1,000 Rhode Islanders. And we’re just getting started. Now, if we are going to have the best pipeline of skilled workers in America, we have to do much more to improve our public schools. Thanks to Senate President Paiva Weed’s leadership, last year we expanded the number of pre-k classrooms and made all-day kindergarten universal across Rhode Island. This year, we are adding a proposal to make the SAT free for all students -- and one to expand computer science programs in all grades-- all with the goal of making our kids’ college or career ready. But there’s much more to do. Only about a third of our students are meeting expectations in English, and even fewer in math. Rhode Island has the lowest high school graduation rate in New England. And, sadly, Rhode Island has one of the largest “achievement gaps” between whites and non-whites in the entire nation. All of our kids deserve better, and I know – acting together – that we can improve our schools so children can get the skills they need to succeed in today’s economy. To begin with, our kids can’t learn in crumbling school buildings. Last year, we launched a new School Building Authority to modernize our school buildings, and work has started. Tonight, I’m proposing that we invest another $50 million to rebuild schools across our state. Next, we need to ensure that we are fair in the way we fund our public schools. A diverse group of Rhode Islanders recently completed a review of our education funding formula. Thank you to Representatives Amore and Ruggiero -- and Senators DaPonte and Gallo -- for serving on the working group. Tonight I propose a revised funding formula that maintains the importance of “money following the child.” But it also levels the playing field between district and charter schools so that all schools can thrive. It provides that when a student moves from a district school to a charter school, some of the money stays behind at the district school. As a result, our public schools will see new investments, and every school district in Rhode Island will be better off than it was before these changes. The proposal also recognizes that certain students face specific challenges which impose extra costs on the schools that educate them. Our proposal boosts resources for schools with students who have greater needs. But we’re only going to pay for what works. So if schools want the extra money, they have to adopt proven best practices. Finally, parents and taxpayers deserve to know how school dollars are spent. So the budget I submit tonight requires every public school to make its actual budget available online for everyone to see. Districts are already collecting the data; let’s post it so everyone can see how our dollars are being invested. Our Education Commissioner will soon present a plan to you that’s designed to strengthen our public schools. It’s a plan rooted in the core belief that all public schools should be high quality schools. And that every kid deserves a public school that will prepare them for their future. To succeed these days, our students need much more than just math and reading skills. They also need to learn how to collaborate, solve problems, and be digitally literate, particularly in computer science. Rhode Island already ranks seventh in the country in spending, so resources alone aren’t the answer. The plan that the Commissioner will detail in the weeks ahead relies heavily on what’s worked in Massachusetts. Massachusetts and Rhode Island schools performed at relatively similar levels about 20 years ago. Since then, Massachusetts has rocketed ahead, and built some of the best public schools in the country. Not surprisingly, its economy has thrived. It’s time for us to follow a similar path. That means keeping our standards high and consistent across the state. But it also means empowering school leaders by giving principals and teachers more flexibility to meet the needs of their individual students. We need to give educators the autonomy and support they need to do their jobs; and then we need to demand evidence that they’re meeting statewide standards. And, like Massachusetts, let’s offer parents and families more choices within the public school system – so that they can send their child to the public school that is right for them. Adhering to these core principles -- high standards, accountability, school empowerment, and expanded choice -- Massachusetts saw test scores rise, students succeed, and their economy boom. We can do this, and we should. Jobs that pay, and skills that matter: these are the building blocks of a stronger economy. But we need a solid foundation -- a business climate that makes it easier to do business in Rhode Island, and a government that is fiscally responsible. Last year, we achieved meaningful savings in Medicaid, and created certainty by locking in pension savings. Together these initiatives have allowed us to avoid tax increases, invest in education and economic development, and reduce our structural deficit. We also eliminated the business tax on energy, cut taxes on small businesses, and maintained the lowest corporate tax in New England. We have to keep going. The budget I submit tonight contains a “Making it Easier to Do Business” proposal. First, it expands online permitting so it’ll be easier for businesses to operate. Second, it targets waste and fraud, especially in our TDI system. And third it lowers the unemployment insurance taxes that businesses pay. Rhode Island ranks our state 49th in the nation -- in unemployment insurance taxes. We have to attack areas like this where we’re an outlier. Our plan will reduce UI taxes, without harming benefits. This tax cut will save Rhode Island businesses $30 million next year alone. And it’s the first time Rhode Island has moved off of the highest tax bracket since 1992. Let’s work together to get this done, and let businesses thrive in Rhode Island. I’ve spent a lot of time talking about the economy tonight because putting people back to work is our top priority. But it’s not our only priority. There are other critical issues addressed in this budget, such as preparing Rhode Island for the challenges of climate change – a threat that we, as the Ocean State, are uniquely vulnerable to. And we must meet these challenges too. But tonight I’d like to touch on just one more issue: the public health crisis of overdose deaths in Rhode Island. Over 200 Rhode Islanders died from opioid-related overdoses in 2014. Since 2005, the number of drug poisoning deaths has exceeded the number of deaths from car crashes and firearms combined. Elise from Pawtucket and her husband are here in the chamber with us tonight. They had two adult sons: Teddy, age 30 and Paul, age 22. Both started using prescription painkillers to deal with back pain from their jobs as furniture movers. We lost both of them to drug overdoses. As parents, Andy and I can’t imagine your pain. Elise is courageously telling their story, and fighting to reassure other families that they aren’t alone. Let’s commit tonight to joining their fight. I am committed, as I know you are, to addressing this crisis. Let’s set a goal of driving down overdose deaths by one-third within three years. We can, if we focus on four areas: (1) treatment, (2) overdose reversals, (3) prevention, and (4) recovery. Among other things, the budget I submit tonight calls for investing more in treatment. The experts say that this is one of the most powerful things we can do to reduce overdose deaths, so I’m inviting you to work with me to get it done. I’ve said it many times before: my vision is of a state where everyone can “make it in Rhode Island.” Together, we can make Rhode Island a place where Genesis doesn’t need to work three jobs to afford college… …a place where my friend from Stop & Shop can to go sleep each night knowing he earned a decent wage and is ahead on his bills… …a place where every Rhode Islander willing to work hard -- has a chance to achieve their dreams. …and a place where parents like Elise and our friend, former Senator Rhoda Perry don’t have to bury their children because of an overdose. Last year I said that we have a tall hill to climb to turn this economy around. And, yes it is still steep. I sure can’t climb it alone. To all of you who’ve rolled up your sleeves to help – volunteers, state employees and members of this Assembly, I say thank you. We won’t always agree, but we are bound together by a love for Rhode Island, and a commitment to lift up our state. So, together, let’s march to the top of the hill and make Rhode Island a place of opportunity for all of our families. Thank you. Office of the Governor 82 Smith Street Providence, RI 02903 Phone: (401) 222-2080 Fax: (401) 222-8096 Contact Us