Surplus shrinks FY2014 deficit to $70M; long-term spending still a problem

Dec 12, 2012

A pre-session House Finance Committee meeting this afternoon offered a mix of good news and bad news: a larger than expected current-year surplus of about $47 million will roughly cut in half the deficit for the budget year starting next July 1, from $130 million to $70 million.

But the state’s structural deficit could grow to about $400 million in five years, due in part to overspending in some state departments. In an interview following the meeting, House Finance chairman Helio Melo said the state needs to be more disciplined:

“We need to as the time goes on to correct our ways of doing business of doing business, and making sure that we can come within our budgets and live within our means.”

A noticeably defensive state Corrections head A.T. Wall was mindful of the implied critique even before taking a seat to speak to the Finance Committee. Wall said the labor-cost intensive Corrections Department is at the mercy of unpredictable things, like an unexpected increase in prisoners in recent months. Dealing with that, he said, “is part of the mission.”

It also means that there’s really no flexibility in controlling the number of commitments or admissions, and limited flexibility about length of stay.”

Melo responded by saying Corrections should seek a refund from the department’s consultant that projects fluctuations in prison population. Wall responded to Melo’s response by saying the consultant’s projections have been extremely accurate since 1989.

Craig Stenning, head of the state Department of Behavioral Healthcare, Developmental Disabilities and Hospitals — known in budget-land as “Buddha” — also offered a defense of his department’s overspending. Stenning said curbing costs on a high rate of staff turnover is eluding the best efforts to trim expenses.

The Finance Committee meeting began with just six of the panel’s 16 members, including lame-duck Representative Jack Savage of East Providence, although a few more straggled in. At the end of the meeting, Melo toasted Savage for his work as a rep.

Richard Licht, state administration director, says Governor Lincoln Chafee plans to present his budget by January 17. The General Assembly resumes action on New Year’s Day.