The coronavirus is destroying the state budget. Here’s what it means

Magazine covers that make reference to the coronavirus sat behind plastic in a magazine dispenser box on a nearly empty street earlier this month in Newport, R.I. Many businesses in that community and across Rhode Island have closed indefinitely, dealing a severe blow to the state's budget.Steven Senne/Associated Press

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LEADING OFF

Happy Wednesday and welcome to Rhode Map, your daily guide to everything happening in the Ocean State. I’m Dan McGowan and seeing Tupac and Ross Perot trending on Twitter brings me back to much simpler times, in part because I was in elementary school when they were cool. Follow me on Twitter @DanMcGowan or send tips to [e-mail].

ICYMI: Rhode Island was up to 7,926 confirmed coronavirus cases on Tuesday, and 239 residents had died. There were 266 people in the hospital, 84 in intensive care, and 55 were on ventilators. On the bright side, we should hit 50,000 negative tests today.

You know things are bad when even the experts are hesitant to project how much money the state is losing from the coronavirus crisis.

The Rhode Island Public Expenditure Council released a new report Wednesday that outlines in painstaking detail the severe budget challenges that the state faces from delays in income taxes and losses in sales taxes and gambling revenue as a result of the contagious disease.

The report stops short of stating just how much of a hole the state faces, but RIPEC president and CEO Michael DiBiase said it’s safe to say it could be “hundreds of millions of dollars” between the current fiscal year and next fiscal year.

The solution is the same one that Governor Gina Raimondo and state legislative leaders are banking on: Hope to God that the federal government gives state more flexibility when it comes to spending the $1.25 billion in stimulus funding that it has received.

We already know that most coronavirus-related expenditures will be covered by federal funds, but it’s still unknown whether states will be able to use the money to replace lost revenue in their budgets.

Aside from the uncertainty around federal support, DiBiase the two biggest variables now are the length of the contraction of the economy and how quickly it will be rebound. Those points sound obvious, but the numbers back it up: The RIPEC report notes that it took Rhode Island five years for personal income taxes to rebound following the Great Recession.

There’s at least one budgetary maneuver the state can use, although it’s complicated. The state had $204 million in its rainy day fund as of June 30, 2019, but Rhode Island and Wyoming are the only states in the country that have a statutory provision requiring a full repayment if those funds are tapped. The only time the state has used the rainy day fund to plug a budget hole was in the 2009 fiscal year, according to the report.

So what does this all mean to the average person?

We still don’t know. DiBiase, whose last job was director of administration to Governor Raimondo, said that without relief from the feds, it’s possible the cities and towns could take a budget haircut, especially when it comes to education funding.

The RIPEC report recommends that the state maintain essential social services, protect some of the programs that have started to make Rhode Island’s business climate more competitive, and use the stimulus money to accelerate the recovery.

In other words, keep everyone happy until the last day of the legislative session, and then immediately announce the beaches are reopening.

NEED TO KNOW

Rhode Map wants to hear from you. If you've got a scoop or a link to an interesting news story in Rhode Island, e-mail us at [e-mail].

⚓ Providence Mayor Jorge Elorza unveiled his proposed budget for the fiscal year that begins July 1, but the state still hasn’t disclosed how it will spend nearly $400 million that will go to the city’s schools.

⚓ Senate Judiciary Committee Chairwoman Erin Lynch Prata is seeking an appointment to the state Supreme Court, and a bunch of evidence suggests that she is the frontrunner for the job.

⚓ The Ethics Commission has dismissed a complaint filed by the state Republican Party against Governor Raimondo accusing her of steering a no-bid lottery contract to a company tied to a top Democratic fund-raiser.

⚓ He didn’t even make it to the Rhode Island House of Representatives before getting jammed up: Laufton Ascencao, who was elected to represent House District 68 in 2018 but resigned before ever taking his seat, has been charged with embezzlement of funds from the Rhode Island chapter of the Sierra Club.

⚓ My colleagues Meghan E. Irons and Malcolm Gay have a must-read on three sixth graders trying to get into Boston Latin, the Classical High School of Boston.

⚓Good stuff from the competition: The controversial Joint Committee on Legislative Services violated the state’s public records law by failing to disclose that it wasn’t in possession of a document related to the Convention Center.

WHAT'S ON TAP TODAY

Each day, Rhode Map offers a cheat sheet breaking down what's happening in Rhode Island. Have an idea? E-mail us at [e-mail].

⚓ BIRTHDAYS: Rhode Map readers, if you want a friend or family member to be recognized on Friday, send me an e-mail with their first and last name, and their age.

⚓ Governor Raimondo’s daily coronavirus update is at 2:30 p.m. (Note the time change.)

⚓ The governor is holding a conference call with all four members of Rhode Island’s congressional delegation at 11:30 a.m. to discuss federal stimulus funding.

⚓The Providence School Board is expected to learn more about Superintendent Harrison Peters’ plan to overhaul the district’s central office.

⚓ This is so cool: A Providence-based cartoonist and printmaker is going to spend 24 consecutive hours drawing – and he’s broadcasting it live.

⚓ Enjoying Rhode Map? Do us a favor and encourage your friends to sign up here.

Thanks for reading. Send comments and suggestions to [e-mail], or follow me on Twitter @DanMcGowan. See you tomorrow.

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