Gov. Daniel J. McKee’s $13.7 billion fiscal 2025 budget recommends “reprogramming” $51.7 million of the roughly $700 million in unspent State Fiscal Recovery Funds that must be allocated by Dec. 31.
But some are questioning whether a portion of those new recommendations for the COVID-19 aid are wise because they appear to be intended to fill systemic budget deficits as opposed to using the money for big-impact, one-off projects.
For example, the McKee administration proposes reallocating $20 million to the R.I. Department of Corrections to reduce “structural shortfalls,” $12.2 million of which would be added to the current budget and another $7.6 million in fiscal 2025.
The administration also seeks to move $10 million of the pandemic relief money in fiscal 2025 to the Rhode Island Public Transit Authority, which has seen ridership dropping 47.6% since 2008, to help fill an $18 million shortfall as the agency conducts an efficiency review.
Micheal DiBiase, Rhode Island Public Expenditure Council CEO and president, says McKee and legislators have done a good job in recent years of enacting budgets funneling one-time federal funds and surplus money to one-time expenses.
But he acknowledged that the proposed allocations of relief money to the Department of Corrections and RIPTA, as well as $10 million proposed for nursing homes, “appear to relate to continuing expenses.”
“While this practice creates a structural problem in the future, the question is whether the structural issue is manageable,” he said.
DiBiase pushes back against the administration’s contention that when it comes to the pandemic aid, it’s use it now or lose it.
“The argument that [American Rescue Plan Act] funding needed to be spent on these items to avoid forfeiture would mean that there were no other one-time expenses available to be funded,” he said. “I am not sure that is the case.”
The administration says the $20 million in State Fiscal Recovery Funds for RIDOC would be shifted under the “revenue replacement strategy” allowable by federal rules for “increased personnel expenses incurred by the Department as a result of recruiting and retention challenges exacerbated by the COVID-19 pandemic.”
R.I. House Minority Leader Michael W. Chippendale is objecting to the reallocation of some of the State Fiscal Recovery Funds, which totaled $1.1 billion when first received in 2021. Chippendale, R-Coventry, says state Republicans tried to hold the line during the creation of the SFRF budget against expenditures that created long-term liabilities.
“It was articulated over and over again, it could only be spent on one-time investments,” he said. “This will cast serious doubts about [the administration] as far as the seriousness my colleagues take their assertion we are not creating programs that will require perpetual funding.”
After several years of budget surpluses and a heaping pile of federal relief money, state leaders are already bracing for a return to budget deficits in the coming years.
“The bill is going to come due at the end of the day. And when the money runs out, either the taxpayers will get a bigger bill, or these departments will have to cut,” Chippendale said. “And I have not known a department to voluntarily cut their budget.”
