R.I. lawmakers lean on quasi-public agencies to help close $134M deficit

R.I. HOUSE FINANCE Chairman Marvin L. Abney, left, with House Speaker Nicholas A. Mattiello, right, on June 15 unveiled the Democrat's $9.2 billion spending plan for fiscal 2018. / PBN FILE PHOTO/ELI SHERMAN
R.I. HOUSE FINANCE Chairman Marvin L. Abney, left, with House Speaker Nicholas A. Mattiello, right, last week unveiled the $9.2 billion spending plan for fiscal 2018 approved by the House on Thursday. / PBN FILE PHOTO/ELI SHERMAN

PROVIDENCE – R.I. House Speaker Nicholas A. Mattiello is not happy with the $9.2 billion state budget proposed for fiscal 2018.

But he is proud of it.

That’s what he told his fellow House lawmakers Tuesday afternoon during a budget briefing, as he detailed highlights of the most expensive – and arguably most complicated – piece of legislation to pass through the Statehouse each year.

“I don’t think you could get it any better with the economic and revenue conditions that we’re facing this year,” Mattiello said.

- Advertisement -

State lawmakers are dealing with an estimated $134 million budget deficit, representing a fiscal hole that must be filled should the state pass a balanced spending plan for the fiscal year beginning July 1.

The House, led by Democrats, unveiled its version of the state’s budget last week, which passed the House Finance Committee. Highlights included a $26 million cut to the so-called car tax, an initiative backed by Mattiello, and about $3.3 million in new spending for a scaled-back tuition-free college program backed by Gov. Gina M. Raimondo.

The House budget totaled about $50.7 million less than what Raimondo proposed in January.

The governor’s proposed budget, however, was created months before the state budget office reported revenue collections falling short of expectations by about $100 million. The weaker-than-expected revenue contributed to the overall deficit, forcing state lawmakers to come up with a strategy to close the hole without raising taxes.

“We didn’t rush to raise taxes when our revenue fell off,” Mattiello said.

Instead, House Democrats are proposing to cut budget items, curb new spending and require Raimondo to find $25 million in unspecified cuts to her departmental spending. The proposed budget would also transfer millions of dollars to the state budget from quasi-public agencies, a tactic known colloquially as “scoops.”

The fiscal maneuvering is an effective – albeit controversial – method of balancing a budget.

“We’ve always opposed scoops,” said John C. Simmons, executive director of the R.I. Public Expenditures Council, a nonpartisan public policy research organization. “It’s a nontaxpayer source of funding that would otherwise be used for other projects.”

Scoops are not uncommon, but many budget observers – including Simmons – say this year’s budget uses more than what’s typical.

The most significant scoop is a $12.5 million transfer from the System Reliability and Energy Efficiency and Conservation Procurement program, an electricity ratepayer-backed program that funds energy-efficient projects throughout the state.

National Grid PLC, the largest utility in Rhode Island, administers the program in concert with state agencies, including the R.I. Public Utilities Commission and the R.I. Office of Energy Resources.

The fiscal 2018 transfer would represent 10.2 percent of last year’s fund, which totaled about $123 million.

“While we are disappointed with this decision, we also recognize the state has to make a lot of painful choices to enact a budget that keeps Rhode Island on a path toward long-term growth,” said Brenna McCabe, a spokeswoman for the R.I. Department of Administration.

OER is a division of DOA.

The House budget also looks to make the following transfers from quasi-public entities:

  • $6 million from the R.I. Health and Educational Building Corp., a quasi-public financier that helps health and education entities access capital. RIHEBC declined to comment on the transfer.
  • $5 million from the Narragansett Bay Commission, a quasi-public agency designed to protect the water quality of Narragansett Bay and its tributaries. A spokeswoman declined to comment.
  • $3.5 million from the R.I. Infrastructure Bank, a quasi-public group that helps municipalities access financing for infrastructure projects. A representative did not immediately respond to a request for comment.
  • $1 million from the Quonset Development Corp., a quasi-public subsidiary of R.I. Commerce Corp., responsible for the development and management of the Quonset Business Park. A representative could not be immediately reached for comment.
  • $1 million from R.I. Housing, an agency designed to help Rhode Islanders access housing.

“Rhode Island faces very real budget challenges this year,” wrote Emily Martineau, a spokeswoman for R.I. Housing, in an email. “However, [R.I. Housing] remains committed to continuing our investment in housing production to boost our state’s economy, as well as the other roles we play in supporting housing and creating jobs.”

Mattiello defended the transfers, saying the one-time funding sources are used to offset one-time expenses, meaning it shouldn’t hurt the budget in the long term.

“It doesn’t do structural harm moving forward,” he said. “You have to be creative and use whatever sources you can.”

Raimondo in her budget also requested transfers from two other quasi-public agencies, the R.I. Resource Recovery Corp. and the R.I. Turnpike and Bridge Authority, but the House didn’t include those in its budget.

Mattiello says he’s hopeful the state’s economy will improve, saying he will not tax his way out of a deficit. The budget will be considered by the full House on Thursday afternoon.

“I’ve been here when we’ve had more revenue, and I’ve been here when we’ve had less revenue,” he said. “I didn’t say I’m very happy with this budget. I said I’m very proud of this budget.”

Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or follow him on Twitter @Eli_Sherman

No posts to display