The House of Representatives approved H.B. 6122 Thursday on a 64-10 vote. The measure would partly decouple from the federal tax treatment of PPP loans that were part of the federal coronavirus pandemic relief effort. Under the budget, the state would tax only forgiven loans of more than $250,000. Lawmakers adopted an amendment to give businesses until March 31, 2022, to pay any taxes owed on the loans.
Democratic Gov. Daniel McKee, in his own budget proposal, had proposed taxing forgiven loan amounts of more than $150,000.
"After experiencing the devastation of the COVID-19 pandemic, this budget not only protects and helps Rhode Island's struggling residents, but it will also drive Rhode Island's pandemic recovery into a successful future," said House Finance Committee Chairman Marvin Abney, D-Newport, referring to the respiratory illness caused by the coronavirus. "Without broad-based tax increases and through the preservation and strengthening of services and programs that help the vulnerable, this budget is a bill that will support most Rhode Islanders attempting to get back to their normal way of life."
The bill would double the state's $2.30 conveyance tax on each $500 of the purchase price of real estate over $800,000. McKee had proposed taxing property tax transfers in his budget proposal, but set the threshold at $700,000. The tax hike is expected to create a funding stream for affordable housing.
Additionally, the budget would renew the state's expiring historic properties tax credit for one year and increase funding for the film and tax credit by $10 million in 2022. It would also continue a scheduled phaseout of the state's automobile excise tax, which is set to be fully eliminated after the 2023 fiscal year, according to a statement.
Lawmakers on Thursday rejected an amendment introduced by Republicans that would have required 50% of motion picture tax credits to be set aside for the exclusive use of Rhode Island businesses. Rep. John G. Edwards, D-Portsmouth, said on the House floor that the provision as proposed would grant the credits on the basis of assets held by those who applied for them.
"These tax credits are not given out monthly, they're given out quarterly at best or, most times, at the end of the project," Edwards said, adding that the credits would not benefit any entity that does not have enough assets or liquidity to actually run the project. "This would be a failure for our state."
The state Senate is expected to begin consideration on the budget bill next week.
Representatives of Republican leaders of the state House and Senate did not immediately respond to requests for comment Friday.
Representatives of McKee did not immediately respond to a request for comment.
--Editing by Vincent Sherry.
For a reprint of this article, please contact reprints@law360.com.