RIPEC releases budget outlook, notes $34.5M projected deficit

THE FISCAL 2015 budget projected a surplus of $500,000, but the state is now projecting a deficit of $34.5 million, the Rhode Island Public Expenditure Council said. / COURTESY RIPEC
THE FISCAL 2015 budget projected a surplus of $500,000, but the state is now projecting a deficit of $34.5 million, the Rhode Island Public Expenditure Council said. / COURTESY RIPEC

PROVIDENCE – The fiscal 2015 budget projected a surplus of $500,000, but the state is now projecting a deficit of $34.5 million, the Rhode Island Public Expenditure Council said.
RIPEC, a nonpartisan public policy research organization, released an analysis of the Ocean State’s budget outlook, which outlines changes that have occurred since the fiscal 2015 budget was enacted, and suggests approaches for the next budget and beyond.
Even though the November 2014 Revenue Estimating Conference projected increased general revenues and a larger-than-expected opening surplus from fiscal 2014, expenditures are projected to outpace revenue growth, RIPEC said.
The Medicaid program and agency overspending are the primary drivers behind the deficit, RIPEC said, adding that Medicaid and cash assistance expenditures will require $37 million in additional state funds above enacted budget levels.
RIPEC added that the state budget office said that state government agencies will exceed their enacted budgets by a combined $42.2 million.

Rhode Island also faces increasing “outer-year deficits,” RIPEC said. Casino gaming in Massachusetts, an unknown fiscal variable, could exacerbate outer-year estimates, which prior to the November conference, ranged between $122.4 million and $172.9 million for fiscal 2016.
“The state’s fiscal structural imbalance, combined with its slower-than-the-region economic growth, require a commitment by policymakers to focus on the major structural budget drivers,” RIPEC said in a news release.

Said John C. Simmons, executive director of RIPEC, “A key focus of the next administration should be controlling the costs of the grants and benefits budget category, as well as focusing on opportunities to grow Rhode Island’s economy through strategic, structural investments.”

The report highlighted Rhode Island’s struggles, and how the state’s economy was especially vulnerable to the Great Recession’s negative effects.
Though the state’s economy has grown by more than 2 percent for the past six economic quarters, it still has not recovered all of the jobs lost in the Great Recession, in contrast with national trends.
RIPEC highlighted testimony at the November Consensus Economic Forecast from the state Department of Labor and Training that suggested Rhode Island recovered only 57.8 percent of jobs lost since the Great Recession. In comparison, Massachusetts recovered 171 percent of jobs from pre-recession levels, and the national economy recovered 112.3 percent.
DLT testimony suggested that Rhode Island is not anticipated to recover 100 percent of jobs lost during the Great Recession until 2018.

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The report can be viewed HERE.

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