PROVIDENCE, R.I. — A panel of Rhode Island lawmakers has approved a $9.2 billion state budget for the upcoming fiscal year that closes a $134 million budget shortfall and finances the first step of a gradual phase-out of the state’s unpopular car tax.

The budget approved just before 1 a.m. Friday by the House Finance Committee also raises the minimum wage, restores free bus fares for the elderly and disabled, and includes a pilot program championed by Democratic Gov. Gina Raimondo to provide two years of free tuition at the state’s community college.

The bill now goes for a vote before the full House of Representatives on Thursday.

Democratic House Speaker Nicholas Mattiello called it a no-frills budget without hikes to any broad-based taxes.



The plan closes a nearly $134 million shortfall through a variety of measures including a $25 million cut in general government spending, $2 million cut from the legislative budget and freezing the creation of new positions throughout government. Mattiello said the Raimondo administration will have to manage the unspecified $25 million general spending cuts. Raimondo’s office declined comment on the details of the House’s plan Friday, saying it would spend the weekend reviewing it. Legislators also hope to raise $7.5 million in revenue by raising the cigarette tax from $3.75 to $4.25 a pack.



Costing the state $26 million in the upcoming fiscal year is Mattiello’s signature plan to cut and eventually eliminate the vehicle excise taxes levied by Rhode Island cities and towns. His plan would reimburse municipalities, enabling them to reduce the taxable portion of a car’s retail value from 100 percent to 95 percent and increase the minimum exemption to $1,000. It also would exempt any car that is more than 15 years old from being taxed, immediately removing about 150,000 vehicles from the tax rolls.



A $2.75 million plan to provide free tuition to complete a two-year associate’s degree at the Community College of Rhode Island is a scaled-back version of Raimondo’s more expansive proposal, which would have provided two years of free tuition at any of the state’s public colleges. Four-year institutions were dropped in a compromise with Democratic legislators over the new program’s cost. Instead of $10 million in the first year, it will cost $4.5 million, half of which is for general support for all public colleges.

Legislators also added new eligibility requirements for CCRI students to get a tuition-free education, including a commitment to stay in the state after graduating. A community service requirement was considered but not included in the plan approved Friday. It’s a “last-dollar” benefit for in-state students who don’t already get a free education through other scholarships.



The panel agreed to increase the minimum wage by 50 cents next year and 90 cents within two years. The current $9.60-an-hour minimum would rise to $10.10 in January and to $10.50 in January 2019.



A $3.4 million-a-year proposal restores a longtime program that provided no-fare bus passes to low-income riders who are elderly or disabled. The Rhode Island Public Transit Authority began charging those riders a discounted 50-cent fare in February, plus 25 cents for transfers, but Democratic legislators said they wanted the free rides restored to help some of the state’s most vulnerable.



The panel pared down some of the Raimondo administration’s proposed economic development initiatives, but preserved two tax credit programs that the governor has used to get businesses to expand or relocate to the state. Raimondo’s top economic development official, Commerce Secretary Stefan Pryor, participated in negotiations with Mattiello and other top legislative leaders until shortly before the revised budget was unveiled Thursday night.



It was shortly before 1 a.m. Friday, about two hours after the budget was publicly unveiled, when the House Finance Committee voted 15-4 to pass the plan on to the full House. The vote fell on party lines, with Republicans citing the lack of sufficient time to consider the proposal as a reason to vote against it.

Democrats were trying to beat a midnight deadline so that the full House could vote on the proposal on Thursday of next week after a required seven-day waiting period. When the deadline was passed, they agreed to waive the seven-day rule. The full House debate is scheduled for Thursday afternoon.