RIPEC: State should move toward investment as revenue improves
AS STATE revenue improves, Rhode Island should move towards and investment-based agenda, according to a R.I. Public Expenditure Council report released Wednesday. For a larger version of this image, click HERE.
PROVIDENCE – As state revenue improves, Rhode Island should move towards an investment-based agenda, according to a R.I. Public Expenditure Council report released Wednesday.
Every year in May and November, representatives from the State Budget Office, the Senate fiscal staff and House fiscal staff meet at the Revenue Estimating Conference and the Caseload Estimating Conference to discuss revised economic outlooks on the Rhode Island budget.
The May conferences both significantly increased revenue and decreased projected medical-assistance expenditures, according to the RIPEC report.
The increased revenue, along with decreased expenditures and a larger-than-projected 2011 closing, led the REC and CEC to project a surplus of roughly $100 million for fiscal year 2012.
The RIPEC report estimates that if the Assembly does not use the surplus in 2012, the fiscal year 2013 budget would open with a net positive of roughly $35 million.
“As Rhode Island’s financial condition continues to improve, the state must consider the effect economic choices it makes today will have on its ability to weather an economic downturn in the future,” said a RIPEC statement.
“It is often the case that when government experiences fiscal good times, state and local officials over-commit revenues in the form of increased spending or tax cuts,” said the report. “Unfortunately, when the economy cools, governments must then reverse these initiatives.”
According to RIPEC, when evaluating the fiscal 2013 budget, funding consideration should focus on which policies position the state to become more competitive.
“The state is now positioned to pursue an investment-based strategy designed to bolster the state's infrastructure, encourage job creation and support investments in the state’s workforce,” said the report.
These investments, according to RIPEC, should be coupled with an “aggressive agenda to streamline government and make it more effective and efficient.”
Much of the state’s projected surplus is related to one-time sources, specifically the state’s lottery winners, one-time business-corporation payments and large lottery-ticket sales due to March’s record Mega Millions jackpot.
“While one-time [revenue sources] will provide a much-needed bridge for the state as it regains its fiscal footing, [it] should be used to fund one-time expenditures and should not be used to restore cuts to programs that will require on-going funding,” said the report.
Restoring programs with one-time revenue, “will adversely impact the state, and could limit the options available to policymakers if revenues do not grow at their current pace or decline again,” the report said.