State Expects Fiscal Year To End Badly

Matthew Kazas

Last Monday afternoon the governor’s budget office released the deficit projection, which is based on revenue and spending levels across state government through the first three months of the budget year. The first-quarter report confirms that the state is on its way to ending the current fiscal year $219.8 million in the red.

Rosemary Booth Gallogly, Carcieri’s budget officer, cited three primary causes for the current year deficit projection of the first quarter report: reduced revenues of $130.4 million, overspending by the state departments of $34.9 million, and an opening deficit of $61.8 million.

Last week state government’s top budget officials agreed to reduce revenue estimates of six months earlier. Top losses included the sales and use tax, which went down $64 million; the income tax, which went down $44 million; and the business corporation tax, which went down $18.9 million.

As more and more Rhode Islanders become jobless, the Department of Human Services’ budget is overdrawn to a higher extent. This year it is expected to overspend its budget by $17 million, due primarily to the rising number of low-income Rhode Islanders on Medicaid. As the unemployment rate grows that number will rise, along with the cost to the state.

"The state has taken significant measures over the past several years, and still revenues are below estimates" said Amy Kempe, Governor Carcieri’s spokeswoman. Kempe described the current financial situation as "one of the most, if not the most, difficult fiscal environments the state has seen."

Sources: Providence Journal