PROVIDENCE – Rhode Island’s budget outlook turned gloomier today with the release of a new report saying the state collected $33.1 million less in tax revenue than had been expected during the first three months of the new fiscal year.
The report estimated the state collected $727.9 million in total revenue from July 1 to Sept. 30, which is 6.2 percent less than lawmakers had expected when they crafted this year’s budget.
“This should be cause for concern,” Michael O’Keefe, the R.I. House Fiscal Advisor, wrote in a briefing for the House Finance Committee.
The biggest shortfall was in state income taxes, which were off $16.6 million, or 6 percent, compared with expectations for the fiscal first quarter, O’Keefe said. Corporate taxes came in 24 percent lower than expected, with a $5 million gap. Sales taxes fell short by not quite 2 percent, or $4.5 million, while inheritance and gift taxes were one-third, or $3.6 million, lower than planned.
The state also saw $2.3 million less in lottery revenue than was expected, a 3.7-percent shortfall.
If the current trends were to continue for the rest of the fiscal year, the state’s revenue would be roughly $207 million lower than was expected when lawmakers approved a $6.9 billion state budget.
Last week, Gov. Donald L. Carcieri told Providence Business News he hoped the state’s budget deficit would be around $100 million. (READ MORE) “I’ll be surprised if it’s a huge number, because we’ve really contracted the spending base significantly,” Carcieri said. Either way, he added, “it’s still going to be tough.”
Indeed, the state was already $33.7 million in the hole even before today’s report because of the failure to end the previous fiscal year with a balanced budget. Carcieri has said the difference should be made up by tapping the state’s rainy-day fund.
O’Keefe told House leaders that the combination of last year’s deficit and this year’s revenue shortfall “appears to indicate a difficult coming budget.”
In an interview this afternoon, Carcieri’s spokeswoman, Amy Kempe, acknowledged the worrisome new numbers. “These are tough economic times,” she said.
But Kempe sought to put the budget shortfall in a larger context. “Rhode Island is not alone,” she said. “Every other state in the nation is dealing with declining revenues. It’s a very tumultuous financial time for our nation.”
The director of the state’s new Department of Revenue, Gary S. Sasse, is completing his own report on first-quarter tax revenue, to be released tomorrow.
“This is the first quarter, and the administration has been holding the line on personnel costs and spending,” Kempe said. “Just as Rhode Islanders have been asked to tighten their belts, so is the state.”
News and information from the R.I. General Assembly, including the House and Senate daily calendars and listings of measures introduced each day, is available at www.rilin.state.ri.us.
