RIPEC warns that R.I. budget ‘dramatically higher’ than 5 years ago

Governor McKee’s budget proposal is “the last of a series of flush state budgets fueled by enormous allocations of federal pandemic funding and very large general revenue surpluses,” the business-backed group says

The Rhode Island State HouseEdward Fitzpatrick

PROVIDENCE — With the House Finance Committee poised to release its state budget proposal, the Rhode Island Public Expenditure Council on Wednesday warned that Governor Daniel J. McKee’s proposed budget represents a level of spending that is “dramatically higher” than just five years ago.

The business-backed group noted that McKee’s fiscal year 2024 $13.7 billion budget proposal is down from $14.1 billion in the revised fiscal year 2023 budget but up from $9.5 billion in the fiscal year 2019 budget.

“The governor’s FY 2024 budget appears to be the last of a series of flush state budgets fueled by enormous allocations of federal pandemic funding and very large general revenue surpluses,” RIPEC President and CEO Michael DiBiase said.

The group warned that this budget marks the beginning of more limited revenues expected for several years.

“Policymakers have had a relatively easy time managing expenditures, but the state is now entering a period in which pandemic-related federal funding will be running out and state general revenue growth will be considerably more constrained,” DiBiase said. “Policymakers will need to avoid unsustainable spending commitments and be prepared to curtail the level of spending growth.”

RIPEC gave McKee credit for a “responsible approach” in budgeting all but $87.7 million of a $610 million surplus to one-time items, and it credited the governor for recommending several proposals to provide tax reductions.

Also, the group noted that the governor’s proposed budget includes an increase in the state’s rainy day fund, new investments in bioscience, and additional funding for the South Quay terminal in East Providence.

RIPEC said McKee tried to address the school funding formula, “which has not operated as intended over the last two fiscal years.” But, DiBiase said, “While the governor has recommended some positive changes to the formula, the state should address education funding comprehensively instead of introducing ad hoc measures that seem to be more intended to address funding gaps for individual districts than to establish coherent and consistent policy for the long term.”

The group made a series of recommendations including:

• “The state needs to avoid spending commitments beyond available resources and prepare to curtail the level of spending growth.”
• “The General Assembly should approve the governor’s proposed creation of a supplemental rainy day fund and should consider further increases to the fund. At 6.0 percent of revenues, Rhode Island’s rainy day fund would still be well below the median percentage among states of 11.9 percent of general revenue expenditures.”
• “Policymakers should reconcile state education aid consistent with the funding formula and reform the formula to direct more aid to economically disadvantaged and multilingual students.”