In a report released Monday, the R.I. Public Expenditure Council analyzes the taxes Rhode Island residents send to Washington and the amount of federal dollars the state receives. Some of the key findings in the “RIPEC Comments” report are:
— In fiscal year 2004, Rhode Island’s per capita federal tax burden of $6,557 was the 15th highest in the United States;
— Rhode Island has experienced the second-fastest rate of growth in per capita federal tax burdens in the region;
— Federal expenditures per dollar of federal taxes paid in Rhode Island was $1.02, ranking the state 31st, compared to $1.11, which ranked 21st a decade earlier; and
— In fiscal 2007, more than 29 percent of the state’s revenue, $1.9 billion, will come from the federal government.
Federal taxes and spending benefits some states and leaves taxpayers in other states paying the bill, RIPEC said. For decades Rhode Island was a beneficiary state in that its citizens received more than a dollar in federal outlays for every dollar Rhode Island taxpayers sent to Washington. While this is still the case, the trend points in the direction that federal tax payments are unlikely to equal federal spending in the Ocean State in the near future, RIPEC said.
Federal tax and spending policies have a significant impact on the fiscal health of Rhode Island’s state and municipal governments, the report said; federal aid and grants are the largest single source of state government revenue. The recommended FY 2007 state budget includes $1.9 billion of federal aid and grants. This represents more than 29 percent of the state’s total revenue, with Medicaid-supported expenditures representing nearly half of all federal fund expenditures.
Since 1994, the amount of money the federal government spent in Rhode Island for every $1 Rhode Islanders pay in federal taxes has been declining at a significant rate, the report said. According to the Tax Foundation, in FY 1994, the federal government spent $1.11 in Rhode Island for every $1 Rhode Islanders sent to Washington. In FY 2004 (latest national data available), this had dropped to $1.02. In FY 1994, Rhode Island ranked 21st in federal spending per dollar of federal taxes paid by its citizens, in FY 2004 the Ocean State’s position dropped 10 places to rank 31st in the nation.
