Rhode Island lawmakers may have a bit more money than previously anticipated to spread around in the next state budget.
New revenue estimates adopted by state budget advisors at the end of the Revenue and Caseload Estimating Conference Nov. 10 add an extra $135.8 million to what they expect will flow into state coffers in fiscal year 2024. The updated $5.5 billion income for the fiscal year that ends June 30 represents a 2.6% bump over what was anticipated in the fall, at the last biannual estimating conference.
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The twice-a-year conferences helps state budget crunchers and lawmakers prepare for the year ahead, offering a better sense of income and expenses based on economic analysis and state agency updates. The latest figures will be used by Gov. Daniel J. McKee’s office in preparing a proposed fiscal 2025 budget to be unveiled in January at the start of the legislative session.
“The results of the Revenue Estimating Conference show steady growth, demonstrating that Rhode Island is not expected to enter a recession and that our economy remains resilient,” Andrea Palagi, a spokesperson for McKee’s office, said in an emailed response on Monday. “While revenues remain steady, we must still be disciplined in balancing the upcoming budget and funding key priorities without raising broad-based taxes.”
The state has long been warned that its days of nine-figure-surpluses are ending, mainly because the windfall of federal COVID-19 stimulus funds over the last two years are only available through December 2024. Meanwhile, an economic downturn – though not a full-on recession – with slower-than-average growth will dampen the tax revenue that comprises a bulk of the state’s annual income.
The good news: Those key revenue sources won’t drop quite as much as expected. Indeed, budget-crunchers upgraded the expected revenue from personal income and sales and uses taxes in fiscal 2024, which are now projected to be $1.9 million and $1.7 million, respectively.
The rosier outlook squares with early estimates from the R.I Department of Revenue, which show revenues through September up 3.4% above forecasts.
Consultants with S&P Global Market Intelligence also shared hints of optimism in their latest presentation, including a lower-than-expected unemployment rate and a drop in mortgage rates by mid-2025.
Other positive changes to fiscal 2024 include an extra $22 million in lottery revenue and $36.6 million in gas and electricity tax revenue. These are partially offset by a $36.9 million cut to non-classified income from other state departments, and $10.7 million less than expected in income from cigarette taxes.
Nancy Lavin is a staff writer for the Rhode Island Current.
