So how can the state make crucial investments in healthcare, education and housing with less money? And what does the state need to do to be more economically competitive? I’m Ian Donnis and this week I’m going in depth with president and CEO of the Rhode Island Public Expenditure Council, Michael DiBiase.

TRANSCRIPT:

Ian Donnis: Governor McKee used his State of the State address this week to offer an optimistic message about Rhode Island’s future. Of course, the Republican leader in the Rhode Island’s House, Michael Chippendale, painted things in more somber tones, underscoring a number of serious challenges the state faces. Do you think Governor McKee is making Rhode Island’s future sound too rosy?

Michael DiBiase: I think it’s his job to be optimistic and set audacious goals. We have a lot of good things going and we also have some serious challenges to deal with. 

Donnis: One of the takeaways from the governor’s state of the state address was what sounded like a fairly audacious goal to raise per capita income in Rhode Island by $20,000, at least by 2030. As it stands, Rhode Island’s per capita income is about 62, 63 thousand dollars, about 20,000 less than for our neighbors in Connecticut and Massachusetts. Of course, we need to know whether this goal would be inflation adjusted or just with a nominal increase in money over time. If this was an inflation adjusted goal, would you think? Is it realistic to think that Rhode Island’s per capita income could increase significantly over the next four years?

DiBiase: So I think it’s good to have an audacious goal, and that’s certainly audacious. And I think it’s the right one. I think if we can increase income, we can solve many of our issues. I would say if we wanted to reach that goal, we would have to have a dramatic improvement in our education attainment and job skill levels. And so including adults, I mean, it would take, it would take an awful lot to get there. 

Donnis: On a related note. We see how Rhode Island lacks well defined engines of job growth You’ve worked for former governors Lincoln Almond and Gina Raimondo So you’ve had an inside view on efforts within state government to try and improve the economy. Right now, Governor McKee and House Speaker Joe Shekarchi talk about the life sciences industry.

There’s an effort to create a life sciences hub, and they have high hopes for that. But right now, that’s more of an idea than a real, than something that’s come to fruition. So, do you think that Rhode Island is taking the right steps now to build a more robust economy? 

DiBiase: So I think some of these initiatives and investments like life sciences, wind power, cybersecurity make a lot of sense. I mean, if we can create centers of excellence here, the more I’ve been around economic development, given that we’re a relatively small metropolitan area, we haven’t been able to attract large employers. I am more around the idea of improving our skill levels of our people. But certainly the the kind of initiatives that the governor and the speaker and the senate president are talking about are consistent with that and in trying to improve our skill levels 

Donnis: Michael DiBiase, your organization the Rhode Island Public Expenditure Council put out a report last week describing how Rhode Island faces significant needs in health care, education and housing and transportation. But how there is less money available for those things now that the federal gusher of COVID aid has expired. How can the state make the best of this more challenging fiscal landscape while trying to make progress on those important needs? 

DiBiase: Yeah, I mean, the important point is we’re not having declining revenues. We’re kind of going back to the budget situation we had before the pandemic, and we’re just going to need to be smarter in our choices. We’re just not going to have as much resources to spread around. 

Donnis: We’re hearing more talk from Governor McKee and other elected officials about weaknesses in Rhode Island’s healthcare landscape. One part of that is how there’s a heavy reliance on Medicaid and Medicare, which pay healthcare providers less than private insurance like Blue Cross. There’s talk now of increasing the Medicaid reimbursement rate. How will this affect the state’s fiscal outlook? And is it realistic to think that the state can make some meaningful progress in this area?

DiBiase: Yeah, I do think this is going to be the central challenge of this budget. So Medicaid is 30 percent of the state spending in the budget. It’s sort of the aircraft carrier of the budget. And the ability to significantly raise Medicaid rates, which we need to do in a lot of places, it’s going to be very hard to afford. So we’re going to have to just be more selective. And how we go about doing that and finding the places, the providers that most need these increases, at least in the short term. 

Donnis: Another big issue in Rhode Island, of course, is the housing crisis. An analysis by your organization shows that even with a big allocation of state funds, only a small amount of the housing needed to address the situation will be built. Is there a better way to move forward in meeting the state’s housing needs? 

DiBiase: I think, you know, if we all agree that this is one of our big social problems, and I think it is, then we, we then have to ask ourselves, is our state response, commensurate or responding enough to the size of the challenge? And historically, we’ve invested little in state money. We just had a big burst of federal money and a credit to the General Assembly and the Governor for doing that. But it seems now we’re going back to a period of, of relatively low state investment. Even the 100 million bond would be spent over multiple years. And I applaud the governor for proposing it, but it’s, according to our, it’s going to be less than a thousand units, according to our calculations.

Donnis: It’s expensive to build housing. That’s part of the problem. you know, given that, given how, housing starts have been very few. Are there other steps that could be taken to make more progress? 

DiBiase: So, I mean, we obviously don’t have all the solutions, but I think we’re going to have to be more aggressive about land use restrictions and easing the ability to build. I think the Speaker has been a great leader on this in some municipalities, but we’re going to need more carrots and sticks to actually push this along. I think we have to look at direct subsidies. more mixed housing, rental assistance, which we really don’t have a rental assistance program. So I think we’re just going to have to have a more robust plan all around to deal with this issue. It’s hard for us. We’re next to affluent areas and they will gobble up our housing as we build it. 

Donnis: RIPEC’S report last week noted how state general revenue spending on education has climbed by more than 300 million since fiscal year 2019. But it seems like progress has been largely elusive in improving public schools. We’ve heard talk for a long time about how important this is for the state’s economy. What is your sense of how the lack of more progress on schools is affecting Rhode Island’s economy right now? 

DiBiase: Yeah, we’ve been at RIPEC pushing for more urgency to fix our schools. We think it’s a real crisis. I was very pleased to see that the governor is proposing 15 million for math and English language coaches, which I think is a great initiative. Money here is necessary but not sufficient. But we have underfunded our urban schools and they have the most needs. You know, one statistic is, this is a couple years old, but Pawtucket spends more than $2,000 less than the average per student all in on education, and that’s, that’s just not fair. It doesn’t mean more money will yield better results, but we gotta have more equitable funding in our schools. 

Donnis: Federal COVID aid enabled Rhode Island to have consecutive budget surpluses, a very unusual situation in Rhode Island. How well do you think elected officials did in managing that money? Did they make, did they use it wisely and get the biggest bang for it considering how money is scarcer now? 

DiBiase: Yeah, I think they did relatively well. They used it for one time purposes, they improved the state’s position, they invested in a lot of places that will yield results. I mean these things are always difficult and political.

Spending a lot of money is a lot like. There’s a lot like cutting budgets, but I think in general, they avoided the structural deficits that could come if they had used it for continuing expenses. 

Donnis: Do you expect that we will see consecutive deficits and red ink in the budget in future years going back to the way it was before COVID?

DiBiase: I think we will see projected deficits going forward. The idea is whether we can, whether we can manage them and do our best with that situation. It’s always about the magnitude and whether we can manage them. 

Donnis: One of the issues cited in RIPEC’s report was transportation spending. RIPTA is facing a big deficit, due in part to how there’s less gas tax revenue than in the past. What can be done to create a more sustainable funding stream for RIPTA and public transit in Rhode Island? 

DiBiase: Yeah, we have not done a deep dive on the RIPTA budget, but it seems obvious in the short term that they’re going to have to, constrain operations, but they’re also going to need more revenue, and I think we need a broader conversation about the future of RIPTA and what we really want from that agency.

Donnis: You’re in a nonpartisan role, but you are a student of politics. I’m curious, why do you think polling shows a majority of Americans for many years have been pessimistic about the future of the country? 

DiBiase: Gee, that’s a very hard question to answer. I’m not sure I’m that much of a student. I do think we’ve seen people lose faith in institutions, not just government, and I think we all have to work harder, and that includes me and you and people around government to help improve it. I’ve seen in my time, state government get a lot more transparent and open, but there’s a long way to go to be more honest with people about our challenges and what type of difficult choices and also delivering results. I mean, people get disillusioned if they don’t get results from government.

Donnis: Rhode Island’s Republicans are proposing creating an inspector general. They say that would root out fraud and waste. Do you have a stance pro or con on that proposal? 

DiBiase: We don’t at RIPEC. I certainly see the merits of that type of independent body. It also will, you know, it also can create issues and conflicts in terms of the accountability of an office like that. So I think it’s something that should definitely be explored.

Donnis: We’ve got to leave it there. Michael DeBiase, President and CEO of the Rhode Island Public Expenditure Council. Thank you very much for joining us. 

DiBiase: Thanks for having me on Ian. I really enjoyed it.

This transcript was edited for clarity.

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The Rhode Island Lottery is celebrating its 50th anniversary. The lottery publicizes occasions that we all fantasize about — when someone spends a few dollars on lottery tickets and wins a big prize. But critics say lotteries amount to a tax on people without much money and play on the unrealistic hope of striking it big. Is this a good way of raising money for the state? You can read more about that in my Friday TGIF column posting around 4 this afternoon on what used to be known as Twitter @IanDon and thepublicsradio.org.

That’s our show for this week. Our producer is James Baumgartner.

I’m Ian Donnis and I’ll see you on the radio.