RIPEC: R.I. total spending grew 16.1% from FY14-19

Updated at 12:17 p.m.

PROVIDENCE – Rhode Island’s state and local governments outspent the national average in fiscal 2019, the latest year for which such data are available, according to an analysis released today by the Rhode Island Public Expenditure Council.

The report, “How Rhode Island Compares State and Local Revenues and Expenditures,” relied on data from multiple sources, including data compiled by the U.S. Census Bureau from fiscal year 2019 in its Annual Survey of State and Local Government, annual personal income data from the U.S. Bureau of Economic Analysis and annual population estimates from the U.S. Census Bureau’s American Community Survey to calculate revenues and expenditures in personal income and per capita terms.

The report found total spending grew 16.1% from fiscal year 2014 to fiscal year 2019. Also, Rhode Island’s tax revenues were greater than that of the U.S. on a per capita basis (by 6.9%)  and in terms of personal income (by 6.8%) but were  relatively standard for New England. Rhode Island ranked fifth highest for tax collections in New England when measured on a per capita basis (greater than only New Hampshire). In terms of personal income, Rhode  Island’s tax collections were the fourth highest in the region (greater than Massachusetts and New Hampshire).

Rhode Island’s expenditures of $228.55 per $1,000 of personal income in fiscal year 2019 were 6.0% above that year’s U.S. average of $215.20 and 18th highest nationwide.

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On a per-capita basis, Rhode Island’s expenditures were $12,951 per person, or 6.1% above the national average of $12,184 per capita, putting the state at No. 13.

“As state policymakers grapple with where to invest an influx of federal funds and craft a state budget, How Rhode Island Compares will be particularly helpful in highlighting areas where Rhode Island needs to invest and where we need to constrain spending in the long term,” said Michael DiBiase, President and CEO of RIPEC. “The state diverges from the nation in several key areas, including our comparatively high reliance on property tax revenues and our relative overspending on education, social services and income maintenance, and public safety,”

The report found Rhode Island spent more overall on education than the U.S. in both per capita and personal income terms 3.2% and 3.1%, respectively. It also found Rhode Island’s spending on education is largely in line with the New England region, however, ranking third highest in the region in per capita terms and second highest on a personal income basis. The Ocean State’s expenditures in this category were 12.7% higher than those of the U.S. on a per capita basis and 12.6% higher in terms of personal income in fiscal year 2019, even though Rhode Island has low levels of elementary and secondary school enrollment, ranking 46th highest of U.S. states for K-12 enrollment per capita in the 2018-2019 school year.

However, research found Rhode Island underspends the nation on higher education, 32.7% lower per capita and enrollment at public institutions is also low, 37 highest in U.S. per capita.

In its report RIPEC, recommended Rhode Island should continue to increase the state share of elementary and secondary education funding to both decrease reliance on property tax revenues and increase equity in elementary and secondary education expenditures. At the same time, policymakers should seek to slow the growth in total state and local expenditures for K-12 and focus investments on improving student outcomes.

Rhode Island’s public safety expenditures exceed the U.S. by 23.4% per capita and personal income. Rhode Island had the highest fire protection expenditures in the U.S. on both a per capita and personal income basis in fiscal year 2019, and though its crime rate was among the lowest in the nation, Ocean State spending on police protection was among the highest in the nation (sixth highest per capita and fourth highest per income).

The report states Rhode Islands second largest spending category was social services income maintenance with 26.7% of total expenditures. Expenditures in this category grew 28.8% between fiscal 2014 and fiscal 2019 while total spending increased by 16.1%..

In its report, RIPEC recommended Rhode Island should focus on controlling the growth of spending on social services and income maintenance, particularly spending on Medicaid, which is growing at a faster rate than total expenditures.

Rhode Island’s transportation spending increased 26.6% between fiscal year 2014 and fiscal year 2019. However, the Ocean State remains 13% lower than U.S. per capita.

In its report, RIPEC recommended that while the Ocean State has significantly increased transportation spending in recent years, given that the state’s transportation infrastructure remains among the worst in the nation and its spending in this category was still below that of the nation in fiscal year 2019, policymakers should continue to increase investments to improve the state’s roads and bridges.

(Updated to report growth rate from 2014 to 2019 and clarify social service and income maintenance)