PROVIDENCE – The state’s financial picture continued to worsen on Monday as Carcieri administration officials raised their estimate of the deficit for the current fiscal year to $219.8 million.
The disclosure of top budget officials’ new shortfall estimate for the current fiscal year, which began July 1, is based on projections made at last week’s semiannual Revenue Estimating Conference.
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Gov. Donald L. Carcieri must submit a revised tax-and-spending plan for 2009-10 by Jan. 21 that would bring the state’s budget back into balance by the close of the fiscal year next June. The governor last week ruled out raising taxes to maintain services, and instead suggested state aid to cities and towns will be cut again.
About 60 percent of the projected deficit ($130.4 million) will be caused by reduced tax revenue, particularly from falling sales and personal income tax collections, officials said. The state is now expected to collect a total of $2.95 billion in tax revenue this year, rather than the $3.08 billion that had been expected.
The rest of the $220 million shortfall was attributed to the $61.8 million deficit left over from last year and $34.9 million in higher-than-expected spending.
Roughly half the higher spending is due to larger numbers of people using Medicaid, the health insurance program for the poor. The state’s portion of the cost of Medicaid was reduced to 36 percent, with the federal government picking up the rest, under the stimulus law signed by President Barack Obama in February.
The budget report did include some positive notes. For example, energy costs are now expected to come in $3 million below budget, and low interest rates will save $7.2 million in debt servicing costs.
The state budget had a shortfall of $590 million last year and $168 million the year before that.
