PROVIDENCE – State budget officials said Tuesday that it appears the state will finish fiscal 2011 with a $4.75 million deficit after fiscal advisers boosted revenue estimates last week but a first-quarter report showed that expenditures will run about $41.6 million higher than budgeted.
The state Budget Office initially had projected a $38.4 million shortfall for fiscal 2011, which ends June 30, after Congress failed to approve extra Medicaid assistance that state officials were depending on to balance the $7.8 billion budget.
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Then last week, officials at the semiannual Revenue and Caseload Estimating Conference concluded that revenues would run about $17.5 million ahead of earlier projections.
While state Budget Officer Thomas A. Mullaney preliminarily said last week that the revenue estimates could mean the state would finish the year with a $4.75 million surplus, he cautioned that those calculations could change after a closer examination of first-quarter expenditures.
And that’s exactly what happened this week.
Much of the expenditure changes in the fiscal 2011 budget can be attributed to the extra Medicaid assistance – about $37.29 million — that had been placed in the state budget but never came.
But unbudgeted expenditures also included other items, such as $3.26 million paid out to prison guards after an arbitrator’s decision awarded members of the Rhode Island Brotherhood of Correctional Officers retroactive payments for cost of living increases back to 2006.
The changes also included $3.4 million of reappropriations from fiscal 2010 for the General Assembly, among other things.
The new estimates were not only the result of higher than expected revenue projections for the remainder of this year and into next year as the economy makes a slow recovery, but also a decline in the public assistance caseloads.
Budget advisers predicted fiscal 2011 revenue will be $17.5 million higher than originally projected, and caseload costs will be $9.6 million lower. Those changes, combined with a $17.7 million surplus from last fiscal year, led to the deficit reduction from the $38.4 million hole projected earlier this year.
The revised fiscal 2011 shortfall also could have implications on the projected deficit for the following budget year.
Last week, Mullaney said that the fiscal hole for fiscal 2012 — initially projected at $320 million — would be lowered to $290.4 million, assuming improved revenue estimates and a roughly calculated $4.75 million surplus for fiscal 2011.
Now that the state is projected to finish 2011 with a $4.75 million deficit, that would bring the 2012 deficit projection to about $300 million.
