PROVIDENCE – Rhode Island had $9 billion at its disposal to pay $12.6 billion worth of bills in fiscal year 2024, according to the latest “Financial State of the States” report released Thursday by the nonprofit Truth in Accounting.
After factoring in total liabilities offset against assets available, the think tank that analyzes government finances, determined Rhode Island was one of
25 states that lacked sufficient funds to meet all their current obligations, earning itself a D grade for its budgeting practices and inclusion in a list of so-called “sinkhole states."
This $3.6 billion shortfall breaks down to a burden of $8,500 per taxpayer, according to the report.
However, Rhode Island fared better than its neighbors. Massachusetts and Connecticut each received F grades for total per-taxpayer burdens of $24,900 and $44,500, respectively.
Even though most states, including Rhode Island, have laws mandating a balanced budget, TIA said in order to claim a balanced budget, elected officials often exclude certain costs from calculations, such as future pension obligations or deferred maintenance.
According to the executive summary, "This practice essentially shifts these financial responsibilities onto future taxpayers, leaving them to cover the expenses that should have been accounted for in the current budget."
Nationwide, total unfunded pension liabilities for fiscal 2024 were $832 billion, meaning for every $1 of promised pension benefits, states had only set aside 72 cents on average to fund them.
While it has been decreasing since implementation of The Rhode Island Retirement Security Act of 2011, Rhode Island still had more than $3.2 billion in unfunded pension liabilities and $271.4 million in unfunded retiree healthcare benefits at the close of fiscal 2024.
TIA renewed calls for the timely release of state annual comprehensive financial reports, which TIA said should be published within 180 days after the end of the fiscal year in line with Government Finance Officers Association standards.
But many states are still falling short, including Rhode Island, which published its comprehensive report 264 days after the end of the fiscal year and was one of 16 states the organization deemed “excessively tardy."
“More and more states are dragging their feet on financial reports – and taxpayers are paying the price,” said Sheila Weinberg, founder and CEO. “Whether it’s due to a shortage of trained accountants or confusing government accounting rules, the public deserves better.”
With temporary federal aid winding down, if federal allocations return to 2019 levels, adjusted for inflation, the analysis shows Rhode Island could see a $1.2 billion reduction, which would represent around 9% of projected expenses for primary government operations.
In August, the Rhode Island Public Expenditure Council in an analysis of the state’s fiscal 2026 budget said that state spending had grown 10.9% over the last two fiscal years despite revenue only increasing by 6.4% during that time. Personnel spending also jumped 4.9% to $65.3 million in fiscal 2026 due to new collective bargaining agreements and continued growth in authorized and filled state employees.
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
