Revenue projections continue free fall

STATE LAWMAKERS ARE FACING a combined state budget shortfall of roughly $200 million over the next year, the Revenue and Caseload Estimating Conference found. /
STATE LAWMAKERS ARE FACING a combined state budget shortfall of roughly $200 million over the next year, the Revenue and Caseload Estimating Conference found. /

PROVIDENCE – State budget officials are projecting that Rhode Island’s revenue will fall $200 million short of expectations for fiscal 2009 and 2010, adding further to the state’s severe financial woes.
Officials at the state’s Revenue and Caseload Estimating Conference yesterday found that the shortfall includes $70 million in the current fiscal year, which ends on June 30, and an additional $130 million in fiscal 2010.
The state’s top budget officers said the numbers are the result of lower-than-expected tax collections – particularly sales and income taxes – as the economy continues to sputter both in Rhode Island and nationwide.
Michael O’Keefe, the House fiscal adviser, said income tax revenue for fiscal 2009 will be $40.4 million lower than projected at the previous revenue estimating conference in November. Sales tax revenue will be $8.9 million lower, while lottery income will be $11 million lower.
In fiscal 2010 the revenue outlook is bleaker, with projections for income tax revenue down $78.2 million from estimates in November, and sales tax and lottery revenue down $21 million and $11.4 million, respectively.
O’Keefe, who has been participating in the revenue conferences since 1991, said he saw similar declines in state revenue in 1991 and in 2002, but this time it’s different.
“The problem in this one is we’re in the third straight year of it, and we’re running out of options,” he said.
The General Assembly last month approved a revised 2009 budget that attempted to close what was then a projected $370 million shortfall. The budget did not contain changes to the state pension system – such as eliminating the annual cost-of-living adjustment – initially proposed by Gov. Donald L. Carcieri.
Now state leaders have seven weeks to make up for the drop in revenue, although O’Keefe said by the end of the fiscal year the $70 million hole should be smaller as certain expense estimates come in lower than projected in November.
In March, Gov. Donald L. Carcieri unveiled a $7.62 billion state budget proposal for fiscal 2010 that resolved a then projected $504 million shortfall in the coming fiscal year. That proposal called for the use of millions of dollars in federal stimulus money, the start of a phase-out for corporate tax and renewed a call for deep cuts in local aid.
The General Assembly has yet to act on the 2010 budget, but the change in revenue figures likely will require state leaders to either raise taxes or cut spending by an additional $130 million.

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