PROVIDENCE – The State of Rhode Island now projects its revenue will fall $233.6 million short of expectations for fiscal 2009, boosting the estimated deficit to about $372 million.
“We expected revenues to be down due to the current economic climate, but we did not anticipate the shortfall would be this great,” Gov. Donald L. Carcieri said in a statement last night. “The gravity of the situation is going to require more dramatic steps.”
The state’s mid-year Revenue Estimating Conference found that, based on year-to-date revenue and current economic trends, Rhode Island can expect total FY2009 revenue to fall 6.98 percent short of the $3.347 billion called for in the state budget enacted this summer.
Meanwhile, the state Caseload Estimating Conference projected a $36 million increase in projected costs this fiscal year. The Ocean State also faces $37 million in other higher-than-budgeted expenses; a $18.7 million shortfall in federal reimbursements to the R.I. Department of Children, Youth and Families; a $10 million tab from its Station nightclub-fire settlement; and a $37.4 million deficit carried over from FY 2008.
“We have already made significant reductions in personnel costs and human service and social welfare programs, while attempting to minimize the impact on funding for cities and towns,” Carcieri said.
“We were able to accomplish a lot last year, without raising broad-based taxes,” the governor acknowledged. Yet, “if we are to successfully reposition Rhode Island’s economy for the future, we will need to make difficult choices now. These difficult choices will include re-examining the breadth of government services provided. Working together with the General Assembly, and our cities and towns, we can come through this recession as a stronger and leaner government.”
Tax collections lagged expectations by about 3.4 percent in the July-through-September period, according to reports early last month by the R.I. Department of Revenue and the General Assembly. (READ MORE) Each report included a warning that the local communities should brace for big cuts in state aid.
Economists Steve Cochrane and Andres Carbacho-Burgos, of Moody’s Economy.com, told the mid-year conference that “Rhode Island has led the way, leading the United States into a recession. … There is no longer just a risk of a recession, because there is already a global recession,” they said, according to a statement posted by The Poverty Institute at the Rhode Island College of Social Work.
Payroll employment in the state “is contracting and is the worst of any of the states in the Northeast and middle-Atlantic areas,” while the home-loan delinquency rate “is higher than United States average, higher than [in] Connecticut and Massachusetts, and there does not appear to be any improvement soon,” the economists added. Going forward, they predicted “a slow turnaround, with the jobs outlook weak through 2009,” and income growth that lags the national average.
“Rhode Island has been hit much harder and was hit earlier than the rest of New England,” added Robert J. Langlais, assistant director for labor market information at the R.I. Department of Labor and Training (DLT).
Carcieri said that, “anticipating a drop in revenues, my staff has been meeting for the past several weeks to develop plans for closing the budget gap.
“Proposals are still being finalized, but the areas of focus include a reduction to local aid, state pensions, review of all state contracts and assets, program reductions and a revision of revenue policies,” he added. “Next week, I will look to meet with House and Senate leaders to review proposals and develop plans to address our current fiscal crisis. We simply cannot afford to wait to address our economic situation.”
News and information from the R.I. Governor’s Office are available at www.governor.ri.gov. Additional information – including past Revenue Estimating Conference reports – is available from the R.I. Department of Administration’s Budget Office at www.budget.ri.gov.
For Leaders Who Don't Have Time to Get Sick
Top performers guard their calendars, delegate relentlessly and optimize every hour of the day. Health,…
Learn More
