RIPEC: Local governments underinvesting in important areas

PROVIDENCE – Rhode Island’s local governments are spending more than regional and national benchmarks on some services, particularly public safety, while underinvesting in other important areas, according to a new R.I. Public Expenditure Council’s study released Tuesday. 

The “Municipal Services in Rhode Island: How Cities and Towns Spend Their Money” report is the fourth in a series on municipal finance. It analyzes how municipalities allocate resources across noneducation services, such as public safety, public works and administration, and offers policy recommendations for consideration at both the state and local levels. 

The report primarily studied two sources of data, U.S. Census Bureau’s Annual Survey of State and Local Government Finances for combined state and local spending and the Rhode Island Municipal Transparency Portal for municipal-level spending. 

RIPEC found local governments in Rhode Island spent $5.36 billion in total in fiscal 2020, the most recent year for which statewide data is available from the U.S. Census Bureau, of which $2.75 billion was spent on noneducation services.

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However, municipalities in Rhode Island collectively spend less overall relative to local governments in other states due in part to a lack of county governments. Total local government spending in the Ocean State was $4,887 per capita, 35th highest across the nation in fiscal 2020, according to the report. 

RIPEC found public safety functions make up a significant portion of noneducation spending by Rhode Island municipalities, 50% as of fiscal 2021, the most recent year for which municipal data is available from the state’s Municipal Transparency Portal. Local government spending on police was $375 per capita in fiscal 2020, seventh-highest among all states, according to the report.  

At the municipal level, several cities and towns had per capita spending more than 20% greater than the statewide per capita total. Additionally, local governments ranked third among states in spending, at $297 per capita, and first among states in firefighter staffing per capita in fiscal 2020. 

In its report, RIPEC found a relative lack of resources dedicated to other core services. Although combined state and local spending on public works is comparable to the region and nation, Rhode Island’s local governments take on a much smaller proportion of spending than in other states, particularly on roads and highways, where Rhode Island’s local per capita spending ranked fourth to last nationally in fiscal 2020, according to the report. 

Municipalities also underinvest in parks, recreation and natural resources relative to local governments in other states on a per capita basis, RIPEC said. The study found local government spending was ranked fourth lowest nationally in fiscal 2020. 

“Rhode Island has historically had a culture of strong local control, which has led to a fragmented and inefficient system for providing services,” RIPEC CEO and President Michael DiBiase said. “Ten of the state’s 39 municipalities have fewer than 10,000 full-time residents, leading in many cases to relatively high per capita spending on certain services. Research suggests there is an opportunity for Rhode Island’s cities and towns to be more efficient by consolidating or sharing services.” 

RIPEC recommendations include:  

  • Municipalities should seek to at least slow the growth of expenditures on police and fire departments and require that departments publish data on calls for service annually to make more informed decisions about staffing and budgets. 
  • Municipalities should pursue, and the General Assembly should incentivize, consolidation or shared services agreements. 
  • The General Assembly should avoid enacting mandates that limit municipalities’ financial flexibility without careful consideration of costs. 
  • Municipalities should increase their investment into public works.
  • Municipalities should increase investment in parks, recreation and natural resources.
  • The state should continue making improvements to the Municipal Transparency Portal to allow for a more complete analysis of municipal service spending.