Here's the proposed House budget for the next fiscal year.  Just one warning: It's 224 pages long.  I haven't had a chance to read the entire budget, but I have read some of it and perused some articles.  Here are my impressions of some of the good and bad points.


The Good
*The corporate tax was not eliminated.  You might be surprised to find this particular item in this section, but let's not forget that eliminating the corporate tax would result in large tax increases for thousands of middle class Rhode Islanders.  I support revamping the tax structure, but my two major ideas, eliminating the income tax or moving to a flat tax for everyone, both involve keeping the corporate tax.

*The threshold for the estate tax was raised to $850,000, and it will be indexed to inflation.  I made a similar suggestion in a past post.  Who would have thought that the House would raise the threshold even higher than I suggested?

*The income tax and sales tax weren't raised.


The Bad
* The capital gains tax was increased, and will now be treated as normal income.  I have no problem with increasing the capital gains tax in the context of a system with no income tax or a flat tax, but raising it in this environment seems misguided.  Of course, only the "wealthy" have capital gains, right?

*Pension rules were changed and might save up to $45 million.  This is good, but not good enough.  The state has used age 62 as a "target" date for retirement, but it doesn't seem like it will apply to many people.  More could have been done.

*An "Amazon" tax, which would require online retailers such as Amazon.com to collect a 7% sales tax for the state.  The tax would apply if local sites refer you to national sites such as Amazon.  My advice?  Go directly to Amazon.com or your online retailer of choice.

*The gasoline tax was raised 2 cents, with the proceeds used to help fund RIPTA.  I don't have any problem with RIPTA getting more funding, but I do have a problem with linking this funding to the gas tax.  Gas prices are close to $3 per gallon.  As it continues to climb, people will buy less gas, the state will collect less revenue from the gas tax, and RIPTA will get less money.  There must be a better way to address this issue.


The Ugly
* Charter schools and Mayoral Academies had $1.7 million cut.  This move isn't shocking, since teacher's unions are so threatened by charter schools.  Every year, I see parents try their hardest to get their children into a charter school because they don't have confidence in public schools.  By reducing funding, the General Assembly has decided to side with the unions rather than parents and children.

* The budget relies on $226 million in stimulus dollars that won't be there in the near future.  Need I say more?  Once again, tough decisions have been put off, hoping that the state will some how find a windfall.

* Rhode Island has a projected deficit of $422.7 million for fiscal year 2012.  The stimulus money will be gone, and the faltering economy will probably make that number grow.  How big will this amount actually be, and how will it be eliminated?