It’s not quite as effective to ask for someone to bring you a raincoat when you’re standing in the middle of a thunderstorm, as it is to have put the raincoat on before you went outside.
But that’s what the legislature is up to. Only now is a legislator suggesting the state needs to do something in the event of a slowing economy. The economy has been slowing for a few months now, slowing quite rapidly. The warnings have been coming for years from economists and this paper, suggesting the legislature and administration prepare for what will inevitably come.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
So now, as the DOW dips below 10,000, the NASDAQ is below 1900, local and national companies are announcing layoffs, corporate profits are below expectations, consumer and business confidence is at its lowest point in years — now, State Sen. William A. Walaska says it’s time to “put a little away for a rainy day.
“… our current state budget surplus may be lulling us into an overly confident financial frame of mind,” says Senator Walaska, a Democrat from Warwick. “Yet no economic upswing is going to last forever, so it would be extremely prudent for the state to prepare for a possible end of this current rosy period, an end that appears even more likely.”
The senator is proposing an increase in the state budget reserve (the rainy day fund) from the current 3 percent of total fiscal year resources to 5 percent.
We would have been full of Walaska’s praises a year or two or three ago, when we and economists like Leonard Lardaro of the University of Rhode Island were consistently warning state government that it was time (then) to prepare for a slowdown.
Economies are cyclical and even in the best of circumstances, the cycle would eventually turn down. In spite of all the public outcries for action, no one in the State House listened. Now, only now that the economy has been in what for some is a free-fall, does one senator suggest that the “prospect of an eventual downturn in the state and regional economy, coupled with all the high-cost programs adopted by the state in recent years, would seem to warrant having a little more on hand to carry the state through any future rough times.”
Dear Senator, the rough times are here. Projections for the future are now for shortfalls, not surpluses. And if it were not for the tobacco money windfall, the state budget would look even less healthy. The time for this action may be long past. The question now is with projected shortfalls, can the state afford to implement your program?
This is yet another example of one of Rhode Island government’s greatest failings — the ability to plan ahead. We are much too slow to put in preventive programs, and too quick to take action once that proverbial horse is out of the barn.
