PROVIDENCE – Even as Rhode Island’s projected surplus was increased to $22 million for fiscal year 2013, the state continues to face “significant deficits” as expenditures outpace revenue, according to a Rhode Island Public Expenditure Council report released Wednesday.
The report – “Analysis of Rhode Island’s Budget Outlook, Debt Position and 2012 Ballot Initiatives” – predicted out-year deficits from fiscal year 2014 onward.
“Unless the state’s structural deficit is resolved, the state will continue to have to choose between making investments in its future and relying on short-term financial fixes and one-time solutions,” said the report.
According to the report, though Rhode Island has made improvements in debt management in the recent past, it still ranks in the top 50 percent of states for debt per capita and debt as a share of personal income.
As a share of personal income, Rhode Island ranked 14th in the U.S., with tax-supported debt accounting for 4.7 percent. Per capita, Rhode Island ranked 12th in the U.S.
RIPEC, which traditionally has not taken positions on bond referenda questions, urged voters to weigh the benefits of capital investments versus the long-term costs of increased debt.
“Capital investments provide both much-needed infrastructure improvements and can help boost the state’s economy,” said the report. “However, how the state funds these projects – particularly with regard to increased debt – is an important consideration.”
On Nov. 6, Rhode Island voters will have the opportunity to vote on seven ballot initiatives, two of which grant approval for state-operated casino gaming at Twin River and Newport Grand.
The other five questions authorize the issuance of general obligation bonds, refunding bonds and temporary notes for various proposals.
The state is proposing $50 million to support higher education capital projects, $94 million to construct a new veterans’ home in Bristol, $20 million for the Clean Water and Drinking Water State Revolving Fund, $20 million for environmental management and $25 million to support affordable housing. The bond referenda total $209 million, but with added interest, RIPEC estimates the total cost at $307.6 million.
For each bond referendum, the nonpartisan agency proposed a series of questions for voters to study including:
“How do the future benefits of the new facility compare to the future operational costs?” regarding the veterans’ home.
“Is there enough demand for affordable housing that warrants the construction and rehabilitation of the properties?” regarding affordable housing.
The nonpartisan agency encouraged Rhode Island taxpayers to judge whether proposed projects will result in investments that strengthen the state’s economy and help lower the high unemployment rate or just add to the state’s already high debt.
Estate and Corporate Income Taxes are changing next year, and business owners and executives should know the details. The PBN Summit on November 6th will provide those details and more - including how much Obamacare's Employer Mandate could cost.
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