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It does cause an annoying malus, though, when you refuse.
The game sort of thinks you are an AI player.
Here's the trigger part of that event:
The event can happen to a nation which fulfills all those requirements. The nation must own Rome, must be catholic, can't be Papal State/Rome, Italy doesn't exist as a nation and must not have declined the event in the past. If it happens to some nation which doesn't fulfill those requirements then the event is modified in some way.
After a recent patch the mod folder was moved to C:\Users\[your username]\Documents\Paradox Interactive\Europa Universalis IV\mod. Go there and make sure that it's empty. Replace the "[your username]" with your own username.
The events folder is wherever your game is installed. You can get there from your game's Steam properties. There's also an events folder inside every mod that modifies events. Files in them replace default events if they conflict with each other.