State Revenue Shortfall Grows By $100 Million

May 10, 2017

Speaker Mattiello and Governor Raimondo conferring during her State of the State address in January.
Credit Ian Donnis / RIPR

State lawmakers will have roughly $100 million less than expected to assemble Rhode Island's budget for the fiscal year starting July 1.

That's the chief takeaway from the conclusion of the twice-a-year state Revenue Estimating Conference held Wednesday at the Statehouse. The revenue gap is bound to have a dramatic effect on how the House of Representatives -- led by Speaker Nicholas Mattiello -- will remake the spending proposal outlined by Governor Gina Raimondo in January.

Mattiello put part of the responsibility on Raimondo.

"I can understand that certain economic projections have been revised to reflect lower growth, but it is frustrating to me that a lot of the budget problems are due to not achieving budget savings or revenue initiatives the [Raimondo] administration proposed last year," the speaker said in a statement. "State government must be managed better so that it works more cost effectively for taxpayers."

Raimondo's communications director, Mike Raia, laid part of the blame on President Donald Trump's administration.

"Across the nation, President Trump's policies have created a lot of uncertainty for businesses and state fiscal officers," Raia said. "At least two-thirds of states, including our neighbors in Massachusetts and Connecticut, have seen revenues fall short of projections as individuals and businesses look to Washington for a signal of what's to come. The General Assembly has some tough choices ahead of them, and Governor Raimondo's ready to roll up her sleeves and work with them to pass a balanced budget that protects the progress we've made in recent years to strengthen our economy and invest in job training and workforce development."

Details on the revenue outlook for the budget year beginning July 1 emerged in painstaking fashion after the day-long conference in the basement House Finance committee room at the Statehouse.

According to the state Department of Administration, revenues trailed November projections by about $99.6 million.

That raises questions about the cuts necessary to balance the budget by the time the General Assembly ends in session, expected around the second or third week in June. Meanwhile, the size of the deficit for fiscal 2018 will come into sharper relief with a state Department of Revenue report expected next week.

"We will continue our diligence and make sure we cover this gap," Mattiello said. "We will look at everything."

Mattiello has prioritized a phaseout of the car tax over five years, beginning with an initial reduction that would cost the state about $40 million.

Raimondo's top goal is the introduction of a program offering Rhode Islanders two years of free college tuition at CCRI, RIC, or URI -- with an initial cost of $10 million expected to grow to $30 million a year -- although Mattiello has indicated a lack of enthusiasm for the concept from the start.