2023 -- H 6004

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LC002383

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO PUBLIC FINANCE -- STATE FUNDS

     Introduced By: Representatives Slater, Diaz, Sanchez, and Hull

     Date Introduced: March 01, 2023

     Referred To: House Finance

     (City of Providence)

It is enacted by the General Assembly as follows:

     SECTION 1. Section 35-4-1 of the General Laws in Chapter 35-4 entitled "State Funds" is

hereby amended to read as follows:

     35-4-1. Revenue credited to general fund — Exceptions — Deposits.

     All receipts and revenue of the state shall be credited by the general treasurer to the general

fund of the state with the exception of receipts or revenue pertaining to the following funds:

     (1) Permanent school fund;

     (2) Touro Jewish synagogue fund;

     (3) Land-grant fund of 1862;

     (4) Veterans’ home fund;

     (5) United States cooperative vocational education fund;

     (6) United States industrial rehabilitation fund;

     (7) Forestry cooperative fund;

     (8) State sinking fund;

     (9) Fire insurance fund;

     (10) Fund for relief of firemen;

     (11) Fund for relief of policemen;

     (12) Coastal Resources Management Council Dredge Fund;

     (13) Funds received from the federal government in accordance with the provisions of parts

1 and 2 of title V of the Social Security Act, 42 U.S.C. § 501 et seq.;

     (14) Any other funds that may by federal law or regulation, or by enactment of the general

assembly, be allocated to a specific fund, provided, that nothing contained in this section shall

amend or modify: § 19-3.1-9, which pertains to securities deposited by trust companies and national

banks having trust departments; § 19-5-15, which pertains to credit unions; nor § 27-1-5, which

pertains to deposits of securities by insurance companies with the general treasurer; and

     (15) Funds received until June 30, 2002, from the northeast dairy compact commission,

which was enacted into law in Rhode Island by P.L. 1993, ch. 106, § 2-24-1 et seq. These funds

are to be passed from the northeast dairy compact commission through the department of

elementary and secondary education to reimburse school districts for school milk that is exempted

from the federal over-order price regulation obligation at 7 CFR 1301. These funds are to be placed

in a restricted receipt account established within the department of elementary and secondary

education separate from all other accounts within the department of elementary and secondary

education. All funds deposited in the restricted receipt account established in this section shall be

disbursed prior to June 30, 2002; and

     (16) State withholding taxes received by the director of revenue beginning July 1, 2023

which shall be remitted to the city of Providence pursuant to chapter 71 of title 44.

     SECTION 2. Section 45-13-1 of the General Laws in Chapter 45-13 entitled "State Aid" is

hereby amended to read as follows:

     45-13-1. Apportionment of annual appropriation for state aid.

     (a) As used in this chapter, the following words and terms have the following meanings:

     (1) “Income” means the most recent estimate of per-capita income for a city, town or

county as reported by the United States Department of Commerce, Bureau of the Census.

     (2) “Population” means the most recent estimates of population for each city and town as

reported by the United States Department of Commerce, Bureau of the Census.

     (3) “Reference year” means the second fiscal year preceding the beginning of the fiscal

year in which the distribution of state aid to cities and towns is made provided however that the

reference year for distributions made in fiscal year 2007-2008 shall be the third fiscal year

preceding the beginning of the fiscal year 2007-2008 and provided further that the reference year

for distributions made in fiscal year 2008-2009 shall be the fourth fiscal year preceding the

beginning of the fiscal year 2008-2009.

     (4) “Tax effort” means the total taxes imposed by a city or town for public purposes or the

totals of those taxes for the cities or towns within a county (except employee and employer

assessments and contributions to finance retirement and social insurance systems and other special

assessments for capital outlay) determined by the United States Secretary of Commerce for general

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statistical purposes and adjusted to exclude amounts properly allocated to education expenses.

     (b) Aid to cities and towns shall be apportioned as follows: For each county, city or town,

let R be the tax effort divided by the square of per capita income, i.e., R = (tax effort)/(income x

income).

     The amount to be allocated to the counties shall be apportioned in the ratio of the value of

R for each county divided by the sum of the values of R for all five (5) counties.

     The amount to be allocated for all cities and for all towns within a county shall be the

allocation for that county apportioned proportionally to the total tax effort of the towns and cities

in that county.

     The amount to be allocated to any city or town is the amount allocated to all cities or all

towns within the county apportioned in the ratio of the value of R for that city (or town) divided by

the sum of the values of R for all cities (or all towns) in that county; provided, further, that no city

or town shall receive an entitlement in excess of one hundred forty-five percent (145%) of that city

or town’s population multiplied by the average per capita statewide amount of the annual

appropriation for state aid to cities and towns. Any excess entitlement shall be allocated to the

remainder of the cities and towns in the respective county in accordance with the provisions of this

section.

     For fiscal year 2004, notwithstanding the provisions of subsection (a), aid calculations shall

be based on a blended rate of ninety percent (90%) of the data from the 1990 census and ten percent

(10%) of the data from the 2000 census. In each of the succeeding nine (9) fiscal years, the

calculations shall be based on a blended rate that increases the percentage of data utilized from the

2000 census by ten percent (10%) from the previous year and decreases the percentage of the data

utilized from the 1990 census by ten percent (10%) from the previous year.

     (c) The total amount of aid to be apportioned pursuant to subsection (b) above shall be

specified in the annual appropriation act of the state and shall be equal to the following:

     (1) For fiscal years ending June 30, 1994 through June 30, 1998, the total amount of aid

shall be based upon one percent (1%) of total state tax revenues in the reference year.

     (2) For the fiscal year ending June 30, 1999, the total amount of aid shall be based upon

one and three-tenths percent (1.3%) of total state tax revenues in the reference year.

     (3) For the fiscal year ending June 30, 2000, the total amount of aid shall be based upon

one and seven-tenths percent (1.7%) of total state tax revenues in the reference year.

     (4) For the fiscal year ending June 30, 2001, the total amount of aid shall be based upon

two percent (2.0%) of total state tax revenues in the reference year.

     (5) For the fiscal year ending June 30, 2002, the total amount of aid shall be based upon

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two and four-tenths percent (2.4%) of total state tax revenues in the reference year.

     (6) For the fiscal year ending June 30, 2003, the total amount of aid shall be based upon

two and four-tenths percent (2.4%) of total state tax revenues in the reference year.

     (7) For the fiscal year ending June 30, 2004, the total amount of aid shall be based upon

two and seven-tenths percent (2.7%) of total state tax revenues in the reference year.

     (8) For the fiscal year ending June 30, 2005, the total amount of aid shall be fifty-two

million four hundred thirty-eight thousand five hundred thirty-two dollars ($52,438,532).

     (9) For the fiscal year ending June 30, 2006, the total amount of aid shall be based upon

three percent (3%) of total state tax revenues in the reference year.

     (10) For the fiscal year ending June 30, 2007 the total amount of aid shall be sixty-four

million six hundred ninety-nine thousand three dollars ($64,699,003).

     (11) For the fiscal year ending June 30, 2008, the total amount of aid shall be sixty-four

million six hundred ninety-nine thousand three dollars ($64,699,003).

     (12) [Deleted by P.L. 2009, ch. 68, art. 6, section 3.]

     (13) [Deleted by P.L. 2007, ch. 73, art. 25, section 1.]

     (14) [Deleted by P.L. 2007, ch. 73, art. 25, section 1.]

     (d) For the fiscal year ending June 30, 2008 the apportionments of state aid as derived

through the calculations as required by subsections (a) through (c) of this section shall be adjusted

downward statewide by ten million dollars ($10,000,000).

     (e) For the fiscal year ending June 30, 2009, the total amount of aid shall be twenty-five

million dollars ($25,000,000) with such distribution allocated proportionately on the same basis as

the original enactment of general revenue sharing of FY 2009.

     (f) For the fiscal year ending June 30, 2009 and thereafter, funding shall be determined by

appropriation; provided, however that, no portion of the state income tax paid to the city of

Providence pursuant to chapter 71 of title 44 shall be considered part of an appropriation or

allocation to the city of Providence under this chapter, but shall be considered a separate allocation

to the city of Providence.

     SECTION 3. Title 44 of the General Laws entitled "TAXATION" is hereby amended by

adding thereto the following chapter:

CHAPTER 71

CITY OF PROVIDENCE - TRANSFER OF PORTION OF STATE INCOME TAXES OF NEW

EMPLOYEES OF NOT-FOR-PROFIT HEALTHCARE INSTITUTIONS AND

INSTITUTIONS OF HIGHER EDUCATION

     44-71-1. Definitions.

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     As used in this chapter, unless the context clearly indicates otherwise:

     (1) "City" means the city of Providence.

     (2) "Director" means the director of the state division of taxation.

     (3) "Educational institution" means any not-for-profit provider of higher education,

including, but not limited to, private colleges and universities.

     (4) "Healthcare institution" means any facility or campus providing not-for-profit

healthcare services, including, but not limited to, hospitals and other licensed inpatient centers,

ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers,

convalescent, extended care and rehabilitation facilities, health maintenance organizations, health

clinics, free­standing emergency rooms, diagnostic, laboratory and imaging centers, visiting nurses'

associations, or other therapeutic health settings.

     (5) "Health service corporation" means any not-for-profit entity formed for purposes

including, but not limited to, establishing, maintaining managing and operating a health care

system, service, network or plan, for conducting scientific or medical research, and/or for training

health care providers and researchers.

     (6) "Initial employment level" means for the tax year January 1, 2022 to December 31,

2022, the aggregate and average numbers of persons employed by the institution for whom state

income taxes were withheld and reported to and/or paid to the division of taxation.

     (7) "Institution" or "institutions" means collectively not-for-profit healthcare institutions,

health service corporations, and educational institution as defined in this section.

     (8) "New employee" or "new employment" means for each calendar year beginning

January 1, 2023, the number of persons employed by the institution during that year, over and above

the number of employees reported as the initial employment level, and for whom state income taxes

were withheld by an institution and submitted and/or paid to the division of taxation.

     (9) "Not-for-profit corporation" means a legal entity, whether a corporation, partnership or

other such entity, formed for some charitable or benevolent purpose and not-for-profit which has

been exempted from taxation pursuant to the general laws or Internal Revenue Code§ 50l(c)(3), 26

U.S.C.§ 50l(c)(3).

     44-71-2. Procedures.

     (a) No later than July 30, 2023, all institutions defined in § 44-71-1 shall provide to the

director, the initial employment level for the institution for the calendar year 2022, and the total

amount of state income taxes withheld from the payroll and provided to the state department of

revenue for the aggregate number of employees for the calendar year 2022. A copy of the

information shall at the same time be provided to the chief financial officer of the city of

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Providence.

     (b) No later than December 31, 2023, each institution shall provide the director and the

chief financial officer of the city of Providence with the following:

     (1) The aggregate number of new employees for the period January 1, 2023 through

December 31, 2023 for whom state income taxes were withheld and submitted to the state

department of revenue; and

     (2) The total amount of annual state income taxes submitted to the division of taxation for

all new employees.

     (c) No later than December 31 of each subsequent calendar year, each institution shall

provide the director and the chief financial officer of the city of Providence with the following:

     (1) The aggregate number of new employees for the individual calendar year; and

     (2) The total amount of annual state income taxes submitted to the division of taxation for

all new employees for the individual calendar year, including estimated state taxes; and

     (3) The total aggregate number of employees for all calendar years since the initial

reporting period; and

     (4) The total amount of annual state income taxes submitted to the division of taxation,

including estimated state taxes, for the total aggregate number of employees for all calendar years

since the initial reporting period.

     (d) All data provided to the director and the chief financial officer of the city of Providence

shall be signed by the person compiling the data and the person authorized to sign on behalf of the

corporation.

     (e) No later than September 1 of each fiscal year beginning with fiscal year 2023, the state

shall remit or transfer to the treasurer for the city of Providence an amount representing twenty-

five percent (25%) of the state income taxes of the aggregate number of total new employees since

the initial reporting period.

     SECTION 4. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC FINANCE -- STATE FUNDS

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     This act would allocate, to the city of Providence, a portion of state income taxes for new

employees of not-for-profit healthcare institutions and private educational institutions in order to

assist Providence ability to absorb desirable and necessary growth in such institutions.

     This act would take effect upon passage.

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