Rhode Island state budget
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Rhode Island is facing a $370 million deficit for fiscal year 2009, approximately 11 percent of general fund.[1] However, for fiscal year 2010 the Center on Budget and Policy Priorities estimates a budget gap of $450 million.[2] In December 2008, Rhode Island's unemployment rate reached 10 percent, the highest rate since 1975.[3] And in light of such declining statistics Gov. Donald Carcieri is calling for not only budget cuts but also reforms to the state's tax and pension systems. “As a state, we are facing a very challenging time, perhaps the most challenging of our lifetime,” said the Governor. “The decisions we make today will have long lasting impact on the future of Rhode Island. We must, as elected leaders, and as Rhode Islanders, make responsible decisions that protect our citizens and strengthen our state.”[4] However, in early April the Legislature approved a revised $7.2-billion budget that does not include the Governor's proposed pension reforms. Carcieri said that he will not veto or sign the bill but does oppose the exemption. [5]
[edit] Impact of budget woes
- Main article: State budget crisis, 2009-2010
- In December 2008, Rhode Island's unemployment rate reached 10 percent, the highest that the state has seen since 1975. According to the Department of Labor and Training there are 56,800 unemployed state residents. At the time the nationwide unemployment rate averaged at 7.2 percent. At the end of 2008 there were 22,000 fewer jobs than 2007. The following industries saw the greatest declines: retail traide, -4,600; manufacturing, -3,800; professional and business services, -3,700; construction, -2,500; government, -2,100. [3]
- In light of the state's budget gap and declining revenues state officials announced a $5 million cut in Medicaid payments for nursing homes; a 2 percent cut of what was planned for nursing care for FY 2009. [6]
- The current budget proposal suggests boosting the state's cigarette tax by $1 to $3.46, the highest in the nation.[7]
- Additionally, lawmakers are proposing to increase gasoline tax by 2 cents per gallon. The current tax is at 30 cents per gallon and in addition consumers also pay an additional one-cent “environmental protection regulatory fee.” According to state officials the 2 cent increase could add $9 million to the $135 million the tax brings in per year.[7]
- Providence, Rhode Island is facing a $16.1 million deficit which lawmakers said is due to cuts in state funding and declining revenue. More than half of the city's budget is reserved for education and in light of necessary budget cuts, lawmakers said that they will look for savings elsewhere. [8]
[edit] Budget background
Rhode Island's fiscal year begins July 1 and ends June 30 of the following year. According to the state Constitution, every year the Governor must present a spending recommendation to the Legislature. However, prior to the Governor's presentation to the Legislature on the third Thursday in January, the Governor reviews individual agency requests along with past and present expenditure and revenue data. Both the Senate and the House use the following months to making necessary adjustments to the proposed budget bill. Once both houses approve a final budget the bill returns to the Governor who may veto legislative appropriations. The Legislature may override any veto by a two-thirds majority vote. [9]
- The proposed FY 2010 budget is estimated to raise the state budget for this year by $304.1 million to $7.2 billion. The increase includes federal stimulus dollars however, the portion paid for by state taxes would drop by $247.4 million. [7]
[edit] Budget figures
The following table provides a history of Rhode Island's expenditures and gross domestic product (GDP).
| Fiscal Year | Expenditures (billions) | GDP (billions) |
|---|---|---|
| 2000 | $6.4 [10] | $33.6 [10] |
| 2001 | $7.2 [10] | $35.1 [10] |
| 2002 | $7.9 [10] | $36.9 [10] |
| 2003 | $8.4 [10] | $39.4 [10] |
| 2004 | $8.9 [10] | $42.1 [10] |
| 2005 | $9.2 [10] | $43.1 [10] |
| 2006 | $9.6 [10] | $45.7 [10] |
| 2007 | $10.1 [10] | $46.9 [10] |
| 2008 | $10.5 [10] | $48.1 [10] |
| 2009 | $11.0* [10] | $49.3* [10] |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
[edit] Ideas about why the crisis exists
- Rhode Island officials reported in March 2009 that Rhode Island's tax revenue dropped nearly $80 million in the past 8 months. Officials attribute the drop to an across the board decline in sales, income and business tax revenue. Rhode Islands total revenue dropped $233 million dollars during the eight month period. Specifically, the state experienced a $12 million dollar drop in sales tax earnings from car sales and a $53 million dollar decline in state income tax collection. [11]
- According to a report by the state Department of Revenue, Rhode Island could collect an extra $1.3 billion in estimated revenue every year should the state not issue any tax breaks. Approximately 48 percent of the estimated forfeited revenue relates to state sales tax breaks and about 41 percent to personal income tax breaks. [12]
[edit] Proposed actions
[edit] Governor Donald Carcieri
In response to the state's growing budget deficit Gov. Carcieri proposed eliminating, for future retirees, the guaranteed 3-percent annual cost-of-living increases retired state workers and teachers currently receive. Additionally the Governor proposed changing the new minimum retirement age to 59. The changes, he said, would shave millions off the taxpayer cost of pensions.[7] In his revised 2009 budget, the Governor eliminated $204 million lowering the FY 2009 bduget to $3.064 billion budget. For FY 2010 Gov. Carcieri called for $3.079 billion in general revenue expenditures, excluding federal stimulus funds. "My budget uses the federal stimulus money as it was intended – to preserve and create jobs. It includes tax reform policies that will make Rhode Island more tax friendly, competitive and will grow our economy," said Carcieri. Under the Governor’s FY 2010 Budget, the corporate income tax will be reduced from 9.0 percent to 7.5 percent, effective January 1, 2010. The corporate tax rate will continue to be phased out in stages, with the complete elimination of the tax by January 1, 2014.[4]
In early April Gov. Carcieri announced that he would not veto the legislature’s $7.2-billion budget, however he added that he would not sign the document either. Instead the budget will become law without his signature. “While the supplemental budget contains nearly 90 percent of my proposed budget, I will not sign it because it does not include the statutory pension reforms which are absolutely necessary to ensure sustainability,” Carcieri said. [5]
[edit] Republicans
Even with the state's need to close a large budget gap some Republican lawmakers said that they are not content with some of the drastic budget cuts, including the elimination of state aid to cities and towns. Rep. John Loughlin proposed increasing the funding by tapping the state's rainy day fund. "Last time I checked, unemployment's in double digits in Rhode Island," Loughlin said. "It's raining. We need this money for our communities...We can't lay off any more teachers and firefighters. We can't cut our municipalities anymore." Loughlin's proposal was shot down. [13] In an effort to raise new revenue in the state some state lawmakers proposed a gas tax increase, however, the Legislature decided to wait to see what neighboring state's plan to do in terms of an increase. House Minority Leader Robert Watson called the delay "cynical" and a maneuver to allow for enough time to quiet the opposition before moving ahead with a potentially larger tax increase. “We’re raising your taxes, trust me … [and] the fact that it was done in secret without any real meaningful dialogue, and the fact that we only held it back because we took a wall of criticism justifiably… [and] we held off because we want to overreach even beyond that, that’s offensive, it’s cynical. And it’s embarrassing,” Watson said. [14]
[edit] Democrats
The current FY 2010 budget plan by Democratic lawmakers proposes several changes including budget cuts and tax increases. And lawmakers warned that that may not be enough. "The way things are going, we don't need a rainy day fund, we need a typhoon fund," Sen. Daniel Da Ponte. In reaction to the approved supplemental 2009 budget Democratic lawmakers restored half of previously removed state aid to cities and towns, in April 2009, however Sen. Frank Ciccone III warned, "There is no more money to go around." Under the latest budget bill the state's cigarette tax will increase by $1 to $3.46 per package. [15] Additionally lawmakers discussed a gas tax increase to stave off service cuts at the Rhode Island Public Transit Authority and repair local roads said Rep. Steven Costantino. "I don't think any of us like to increase taxes," Costantino said. "You have potholes right now in streets. You can't wait four months from now and decide, 'Oh, we're going to fix them.'" However, in an effort to reduce state expenditures the Governor recommended reforms to the state's pension system. Democrats rejected the changes that Carcieri wanted to make to the state employee pension system, including setting a minimum retirement age and eliminating annual cost-of-living adjustments. [16]
[edit] Don't cut state aid to cities and towns
In 2009 the state Legislature proposed a supplemental budget to help close FY 2009's budget gap, however, on March 29,2009 a group of mayors argued against the proposition. The bill recommends cutting $55 million in state aid to cities and towns for the next three months and to tax unemployment benefits. Providence Mayor David Cicilline said that the tax on unemployment benefits would be a strong blow to people "who are already facing the indignity of not being able to find a job.” Instead, Cicilline suggested that the Legislature adopt pension reform. “I’ve got three months to find $3.5 million in cuts, and there’s no way to do it,” said Johnston Mayor Joseph Polisena. “The state has a bad budget. Don’t make 39 bad budgets.” One of the problems said the mayors, is that the budget proposal doesn’t give communities the ability to control minimum staffing levels. North Providence Mayor Charles A. Lombardi noted that without the ability to make minimum staff changes, budget cuts are going to be tough to complete. [17]
"The General Assembly has chosen to avoid making the tough decisions while tying the hands of cities and towns and raising taxes. By eliminating the $55 million in general revenue sharing to cities and towns, without providing them with the tools they need to balance their budgets, they are left with no other choices but layoffs, severe cuts to municipal services, or large property tax increases," said Gov. Carcieri of the Legislature's supplemental budget.[18] In April 2009 lawmakers restored approximately half of the $55 million in state funding to the cities and towns. [13]
[edit] Economic Stimulus Package
Rhode Island is expected to receive $1.08 billion from the $787 billion dollar economic stimulus.[19] All told, the federal stimulus plan would create or save 12,000 jobs in Rhode Island, based on White House estimates.[20]
For more information on how the federal stimulus funds are being used in the state of Rhode Island, visit the state recovery website.
According to preliminary reports, Rhode Island is expected to receive:
- $3.4 million will be used towards local train stations [21]
- $165 million in stabilization funds [22]
- $135 million towards public school and three public colleges [22]
- $11 million for the Providence VA Medical Center [23]
- $17 million to retrain workers and employ youth [24]
[edit] Budget transparency
Rhode Island began posting its checkbook register online in February of 2008. The site was created using existing monies within the current state budget.[25] It allows citizens to view the Treasury's Accounts Payable expenditures.[26] The checkbook register was posted by the Treasurer of Rhode Island, Frank T. Caprio as fulfillment of his campaign promise made in 2006:
"This pilot project achieves a key priority of my administration. Our hope is that the Office of the General Treasurer's transparency site will quickly become the model for state and local government in their efforts to be more accessible and accountable to the taxpayers of Rhode Island," Treasurer Caprio said.[26]
The site also contains information on the current years fiscal statement, budgets and some general salary data.[27] The state also has various Independent transparency sites.
Rhode Island's Department of Administration began posting its expenses online in February, 2009.[28] The site is accessible here. Other departments and government offices have since posted their spending records online as well.
[edit] Legislation
Currently no legislation has enacted transparency measures within the state.
[edit] Government tools
The State of Rhode Island maintains its own Transparency Portal, which contains links to the FY 2009 financial records and personnel statements of fifteen government departments. These individual Transparency Portals can be accessed via the links below.
- Department of Children, Youth and Families Find out how much of CYF's $240,913,187.11 FY 2009 expenditures went towards residential services, foster care payments, and subsidy programs for state dependents and delinquents.
- Deparment of Health Analyze three major components of DOH's $76,983,162.37 FY 2009 budget: pharmaceuticals, training consultants, and medical supplies.
- Office of the Adjutant General/Military Staff See how much money is spent on building renovations and improvements, renting outside properties, and fuel by the Office of the Adjutant General/Military Staff.
- Department of Public Safety Find out how much the DPS spends on State Police retirement pensions, construction in progress, and military supplies.
- Department of Education In FY 2009, RIDE spent $942,454,306.39 on projects such as education and community aid, teacher retirement pensions, and scholarships, loans, and grants.
- Department of Corrections DOC expenditures for FY 2009 totaled $214,932,485.49, with large portions spent on medical care and pharmaceuticals, building maintenance and repair, and ISF overhead/service charges.
- Department of Revenue Look at DOR expenditures on lottery commissions, postage and postal services, and contruction in progress.
- Department of Elderly Affairs The DEA is responsible for public transit transfers, grants, and other financial services for the elderly.
- Department of Business Regulation The Rhode Island Department of Business Regulation spent $9,753,489.88 in FY 2009, including large expenditures on actuarial financial services, postage and postal services, and management consultants.
- Department of Labor and Training Much of the DLT's FY 2009 expenditures went towards non-state SDA payments, municipal police and fire pensions, and non-taxable claims, settlements, judgments, and torts.
- Department of Environmental Management Find out how much the DEM spends on land, renting outside property, and environmental services.
- Department of Transportation Major expenditures in the DOT FY 2009 budget include transfers to the Garvee Fund, infrastructure maintenance and improvement, and transfers to the Economic Public Transit Authority.
- Office of the Governor See how much of the Office of the Governor's $4,943,911.60 FY 2009 budget went into ISF overhead/service charges, office supplies and equipment, computers, and telephones.
- Department of Administration The DOA spent $791,990,050.26 in FY 2009, large portions of which went towards appropriated aid, medical claims and premiums, and transfers to the RI Convention Center Authority.
- Office of the General Treasurer Find out how much the Office of the General Treasurer spent on refunds and bad debt, non-taxable and taxable claims and settlements, and renting outside property in FY 2009.
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[29]
- Rhode Island will receive an estimated $697,905,208.[30]
- The economic recovery website to show how legislators and government officials in Rhode Island are spending Federal funds is available here.
[edit] Independent transparency sites
The Ocean State Policy Research Institute has launched a transparency website called the Transparency Trainthat provides access to a variety of websites designed to present public information in a Google-style searchable format.
The Rhode Island Statewide Coalition Foundation maintains a transparency website called the www.themoneytrail.org.as well as www.rhodeislandvotes.org.which displays comprehensive legislation and voting records.
The Ocean State Policy Research Institute has also recently established www.ristimulus.org, a transparency website dedicated to tracking the federal stimulus money coming into the state. RI Stimulus Watch provides users with information on all public projects being funded by the federal stimulus money and allows the public to vote on whether or not they support each project, as well as to post comments. Projects can be sorted by cost, location, and most/least critical (based on user ratings).
In addition, the Ocean State Policy Research Institute is developing a site dedicated to transparency in public school spending, which it plans to launch later this year.
[edit] Public employee salary information
The Providence Journal is conducting a continuing report of Public Payroll in Rhode Island.
The Ocean State Policy Research Institute's existing independent transparency site, www.transparencytrain.org,also contains salary data for employees of the state and municipality over the last two years.
The Rhode Island Statewide Coalition Foundation's new independent transparency site, www.themoneytrail.org,contains salary data for employees of the state and municipality over the last two years.
[edit] See Also
Rhode Island taxpayer-funded lobbying
[edit] External links
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- State of Rhode Island Transparency Portal
- Rhode Island Statewide Coalition Foundation
- Ocean State Policy Research Institute
- Rhode Island Department of Administration, Budget Office
- Rhode Island Budget, Fiscal Year 2009
- Rhode Island Government spending
[edit] Additional reading
- The Providence Journal,"No hunger pangs in the State House," April 1,2009
- State of Rhode Island,"Governor Launches Small Business Stimulus Package," December 11,2009
- Gov. Carcieri,"FY 2010 Governor's Budget," retrieved April 19,2009
[edit] References
- ↑ Associated Press,"Cigarette, fuel tax hikes in RI budget plan," March 28,2009
- ↑ Center on Budget and Policy Priorities,"State budget troubles worsen," March 13,2009
- ↑ 3.0 3.1 The Providence Journal,"Rhode Island unemployment rate hits 10 percent," January 23,2009
- ↑ 4.0 4.1 Gov. Carcieri,"FY 2010 Budget to Include Major Tax Reforms Amendments to FY 2009 Budget Partially Restores Local Aid and Averts Reductions to Critical Social Programs," March 10,2009
- ↑ 5.0 5.1 The Providence Journal,"Carcieri lets budget stand without signature or veto," April 8,2009
- ↑ Associated Press,"Nursing homes in R.I. bracing for worker cuts," April 19,2009
- ↑ 7.0 7.1 7.2 7.3 The Providence Journal,"R.I. House Finance panel OKs its own plan to fill state budget holes," March 28,2009
- ↑ The Brown Daily Herald,"City faces deadline to solve budget woes," April 14,2009
- ↑ State of Rhode Island,"Budget process primer," retrieved April 19,2009
- ↑ 10.00 10.01 10.02 10.03 10.04 10.05 10.06 10.07 10.08 10.09 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 US Government Spending,"Rhode Island State and Local spending," retrieved April 15,2009
- ↑ WPRI,"State loses tax revenue in bad economy," March 25,2009
- ↑ The Providence Journal,"Groups seek improved reports on R.I. tax-breaks," April 10,2009
- ↑ 13.0 13.1 Associated Press,"RI lawmakers restore some money for cities, towns," April 2,2009
- ↑ The Providence Journal,"Measure to close R.I. budget deficit OK’d by House," April 2,2009
- ↑ Associated Press,"RI Senate approves $7.3B budget making deep cuts," April 2,2009
- ↑ Associated Press,"Cigarette, fuel tax hikes in RI budget plan," March 27,2009
- ↑ The Providence Journal,"Mayors call for Assembly to revamp supplemental budget," March 30,2009
- ↑ Gov. Carcieri,"Governor Carcieri Blasts General Assembly FY 2009 Supplemental Budget Proposal," March 26,2009
- ↑ State of Rhode Island,"Frequently Asked Questions-Economic Recovery and Reinvestment," retrieved April 15,2009
- ↑ American Recovery and Reinvestment Act,"Impact," retrieved April 15,2009
- ↑ The Providence Journal,"In R.I., $3.4 million of the federal stimulus package for train stations," March 27,2009
- ↑ 22.0 22.1 Providence Journal,"Stimulus money for Rhode Island's public colleges at risk," March 24,2009
- ↑ Associated Press,"RI Veterans Centers Getting Stimulus Funds," March 28,2009
- ↑ Associated Press,"R.I. gets $17M to train unemployed workers, youth," March 30,2009
- ↑ Rhode Island State Treasurer, How much did this project cost?
- ↑ 26.0 26.1 Rhode Island.gov, Treasurer Caprio Debuts State's First Ever Online, Real-time Checkbook of State Spending, Feb. 9, 2009
- ↑ Rhode Island Treasurer, 2009 Budget
- ↑ RI.gov, "Department of Administration Launches Transparency Portal," 02/16/2009
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ Wall Street Journal,"Stimulus spending by state," April 9,2009
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