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Mon August 26, 2013
Budget Office: RI Deficit Set to Grow to 410M in FY 2018
Rhode Island continues to face onerous budget deficits for the near future -- from $149.2 million for the fiscal year starting in July 2014 to $410 million in FY 2018, according to a new five-year analysis by the state Budget Office.
The cascade of red ink will place pressure on lawmakers to find fresh spending cuts, even as new casinos in Massachusetts are expected to cut into one of Rhode Island's top revenue sources -- gambling. The legal challenge to the 2011 overhaul of the state pension system poses another possible wild card.
The budget passed by the General Assembly in June made some minor trims in future deficits. For example, the FY 2015 deficit has been cut from $170.5 million to $149.2 million, and the hole for FY 2018 has fallen from $468.9 million to $410 million.
The Budget Office says, however, the deficits are projected to range from 4.3 percent of state spending in FY 2015 to 10.4 percent of spending in FY2018.
The situation is propelled in part by how the expenditure side of the spending plan is expected to increase "at an average annual rate of 4.0 percent from the FY2014 base to FY 2018." Grants and benefits are expected to climb by 5.3 percent annually over the same period. State revenue simply isn't keeping up with those rates of increase.
The Budget Office offers this warning about gambling revenue, Rhode Island's third-largest source of state spending:
"Projected out year revenues are significantly impacted by the expected opening of gaming facilities in Massachusetts in the coming years. Lottery transfers to the State general fund are projected to diminish by a total of $293.2 million over the five year forecast period, due to the increased competition to Rhode Island’s gaming facilities in Lincoln and Newport."
Without this impact on Rhode Island’s gambling revenue, the Budget Office says, "the five year forecast would show deficits of $149.2 million in FY 2015, $165.9 million in FY 2016, $220.6 million in FY 2017, and $278.9 million in FY 2018."