Rhode Island state budget and finances

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Rhode Island state budget

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Budget calendar:  Annual
Fiscal year:  2014
Other state budgets
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The Rhode Island legislature approved the $8.1 billion state budget on June 11, 2012,[1] and Gov. Lincoln Chafee signed it into law on June 15, 2012, two weeks prior to the start of FY2013.[2]

The state operates on an annual budget cycle.[3] The state's fiscal year begins July 1.

Rhode Island has a total state debt of approximately $18,915,754,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 state budget gap.[4] The FY2012 state budget total is less than the FY2012 state debt $19,497,824,000.[5]

Rhode Island's total state debt per capita is $17,992.69.[6]

According to a 2012 study by 24/7 Wall Street, Rhode Island is the 49th worst run state taking into account debt per capita, budget deficits, unemployment, median household income, and the percentage of the percentage of the population below the poverty line. The best run state is North Dakota and the worst run state is California. [7]

Federal Aid to State Budget

The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):

State 2008 2009 2010 2011
Rhode Island 31.59% (#18) 35.66% (#15) 37.94% (#20) 38.26% (#18)
  • Figures were calculated by dividing each state’s intergovernmental revenue into its general revenue.[8][9]

Fiscal Year 2013 State Budget

Gov. Lincoln Chafee signed the $8.1 billion FY2013 state budget into law on June 15, 2012.[10] The budget as enacted can be found online.Cite error: Closing </ref> missing for <ref> tag

The FY2013 budget increased spending by $400 million from the $7.7 billion FY2011 budget.[11]

Legislative Proposed Budget

The Senate passed the $8.1 billion budget on June 11, 2012. Amendments rejected by the Senate including a proposal requiring state lawmakers to pay a 25 percent co-share for their health insurance and taking money from the General Assembly's controversial legislative grants program.[1]

The House approved its version of the budget on June 8, 2012.[12][13] The Senate approved the budget with a vote of 30-7 on June 11, 2012, and sent it to Gov. Chafee.[1] Highlights of the budget include:[1]

  • increasing the cigarette tax;
  • adding tolls to the Sakonnet River bridge;
  • applying the state's 7 percent sales tax to pet grooming services, taxi and limousine rides, charter buses and footwear and clothing that costs more than $250.

The tax extension is expected to generate $10.4 million.[13]

On May 31, 2012, the House Finance Committee approved a proposed $8.1 billion state budget.[14] Highlights of the legislative budget include:

  • tens of millions of new school aid dollars to the cities and towns;
  • increasing the taxes on cigarettes by four cents to $3.50;
  • applying the state's 7-percent sales tax, for the first time, on clothing and footwear costing more than $250, car washes, pet grooming, and taxi and limousine services.

Governor's Proposed Budget

Gov. Lincoln Chafee proposed a $7.9 billion FY2013 state budget as part of he state of the state address he delivered on Jan. 31, 2012. In his budget, the governor eliminated the current exemption on taxes on clothing and footwear items costing more than $175 million.[13] Other taxes he would raise include:

  • upping the cigarette excise tax by four cents to $3.50 per pack;[13]
  • meals and beverage taxes would be increased from 1% to 3%, generating a projected $39.5 million, to be devoted to the school funding formula;[13]
  • expands the lodging tax base, to include rentals of vacation homes and rooms in bed and breakfasts which have fewer than 3 bedrooms to rent;[13]
  • elimination of Election Day as a state employee holiday;[15]
  • ending dental services provided to adult Medicaid recipients.[15]

Fiscal Year 2012 State Budget

The legislature approved the $7.7 billion state budget on June 29, 2011,[16] and Gov. Lincoln Chafee signed it the following day, the day before the start of fiscal year 2012.[17] The budget can found online.[18]

The state had faced a $290 million deficit for FY2012 according to estimates in November 2010.[19]

The budget that passed and became law did not have several of the recommendations included in the governor's proposed budget. Highlights of the budget include:[17]

  • Instituting a 7 percent sales tax on the purchase of over-the-counter drugs, smartphone applications, software and videogame downloads and sightseeing tours which is expected to generate $17 million in FY2012[20]
  • Cutting more than $100 million in state spending
  • Increases the monthly premiums paid by some families on Medicaid
  • A three-year halt to new school construction projects
  • Ending automatic pay increases for state workers based on years of service.

The fee and tax increases in the budget will generate $20 million in new revenue.[21]

Cities Asking for State Assistance

In the past three years, the state has cut $193 million in state aid to cities and towns. Cities have asked the state for assistance, and the governor in January 2012 asked the General Assembly to approve $2.6 million for Central Falls, and lawmakers advanced East Providence $12.6 million in state education funds. Other municipalities are requesting more state aid, $111 million in additional school funding. The governor said the challenges facing the state's 39 municipalities threatens the state's economic recovery, but he also acknowledges the state must eliminateits own $120 million deficit.[22]

Legislative Proposed Budget

The legislature approved the $7.7 billion state budget on June 29, 2011, with the Senate voting 30-7 for passage[23] and the House approving it five days earlier with a vote of 60-9 in favor.[17]

On June 17, 2011, House Democrats released their $7.7 billion state budget. House and Senate Democratic leaders rejected the centerpiece of the governor's budget-proposal — $165 million in new sales taxes -- saying it would be too heavy a burden. Sales tax would rise to 7 percent tax on Oct. 1 on several items, including over-the-counter drugs, digital downloads, insurance proceeds and sightseeing tours, an increase expected to generate $17 million.[24]

Under the proposed House budget, state employees would no longer receive automatic longevity raises but would get their second 3-percent raise in six months in July, at a cost to the state of $25.3 million. They also would not have to pay more into the state pension fund as Chafee proposed.[24] Families enrolled in the state-subsidized health-insurance program RIte Care would pay higher co-shares, but lawmakers rejected lowering the income-eligibility ceiling to 133 percent of the federal poverty level, a move that would have saved the state $26 million but disqualified an estimated 6,000 parents.[24]

Legislators also agreed in part with the governor's move to give increase funding for higher education, giving the state colleges approximately $4 million more.[24]

Governor's Proposed Budget

The state budget office instructed agencies to submit two budget plans for FY2012: one maintaining current services and another reducing costs by 15%.[25]

Gov. Lincoln Chafee, an Independent, proposed his $7.66 billion FY2012 budget proposal to the General Assembly on March 8, 2011. The state faced a projected $331 million budget deficit in the fiscal year beginning July 1. [26] Chafee proposed a lower, but broadened sales tax as a way to eliminate a budget deficit. Chafee argued that a broader sales tax would allow the state to reduce its overall sales tax rate from 7 to 6 percent.= and would generate more than $165 million in annual. Under the plan some previously tax exempt items would be taxed, including eyeglasses, non-prescription drugs, movie, concert and sports tickets, newspapers, taxi fares and dry cleaning. A new 1 percent sales tax would be levied on clothes, shoes, coffins, heating fuels, residential water bills and textbooks. Groceries, prescription drugs and gasoline would not be subject to the new tax.

Chafee's budget proposal cut $60 million in Medicaid expenses through restructuring reimbursement rates and contracts with nursing homes, hospitals and other medical providers. Chafee recommended cutting the corporate income tax from 9 to 7.5 percent over three years.

Budget highlights included:

  • Spent $13.2 million more on public schools
  • Spent $10 million more on higher education
  • Increased parking fees at state beaches from $6 to $10
  • Doubled seasonal beach passes from $30 to $60 for residents, and from $60 to $120 for non residents
  • Eliminated a tax credit given to production companies who film in Rhode Island to raise $1.3 million
  • Imposed 6 percent sales tax on medical marijuana to raise nearly $803,000 and levies a 4 percent tax on the net revenues of medical marijuana centers
  • Used hotel room taxes to create a Tourism Asset Protection fund for funds to maintain and improve state tourist sites and facilities
  • Provided cities that address long-term debt issues with incentives from food and beverage taxes
  • Assessed fee of $50 on all returned checks to the Department of Motor Vehicles

Public Pension Reforms

Chafee's proposed budget calls for higher pension contributions, which he projects would raise $40 million for the state's pension system, which now has a projected unfunded liability of $4.7 billion. Under the plan state police, teachers and workers would increase their pension contributions to 11.75 percent of their paychecks. Now, state workers contribute 8.75 percent and teachers pay 9.5 percent. Chafee's budget plan creates a new Municipal Accountability, Stability and Transparency Fund to offer cities extra state funding if they work to address unfunded pension liabilities. Rhode Island cities and towns have a combined unfunded liability of $1.9 billion when it comes to their pension plans, and a combined unfunded liability of $2.4 billion when it comes to other post-employment benefits (mainly health benefits), a report by Moody’s Investment Services said. [27]

Budget transparency

Rhode Island began posting its checkbook register online in February of 2008. The site was created using existing monies within the current state budget.[28] It allows citizens to view the Treasury's Accounts Payable expenditures.[29] The checkbook register was posted by the Treasurer of Rhode Island, Frank T. Caprio as fulfillment of his campaign promise made in 2006:

"This pilot project achieves a key priority of my administration. Our hope is that the Office of the General Treasurer's transparency site will quickly become the model for state and local government in their efforts to be more accessible and accountable to the taxpayers of Rhode Island," Treasurer Caprio said.[29]

The site also contains information on the current years fiscal statement, budgets and some general salary data.[30] The state also has various Independent transparency sites.

Rhode Island's Department of Administration began posting its expenses online in February, 2009.[31]

Government tools

The State of Rhode Island maintains its own Transparency Portal, which contains links to financial records and personnel statements of fifteen government departments. It also links to the RIPAY website, which contains expenditures organized by vendor. [32]

The following table is helpful in evaluating the level of transparency provided by the Transparency Portal:

Criteria for evaluating spending databases
State Database Searchability Grants Contracts Line Item Expenditures Dept/Agency Budgets Public Employee Salary
RI Open Government Y
600px-Yes check.png
600px-Yes check.png
600px-Yes check.png
600px-Yes check.png
600px-Red x.png
See also: Evaluation of Rhode Island state website

Independent transparency sites

The Ocean State Policy Research Institute has launched a transparency website called the Transparency Trainthat provides access to a variety of websites designed to present public information in a Google-style searchable format.[33]

The Rhode Island Statewide Coalition Foundation maintains a transparency website called the www.themoneytrail.org as well as www.rhodeislandvotes.org, which displays comprehensive legislation and voting records.

The Ocean State Policy Research Institute has also recently established www.ristimulus.org, a transparency website dedicated to tracking the federal stimulus money coming into the state. RI Stimulus Watch provides users with information on all public projects being funded by the federal stimulus money and allows the public to vote on whether or not they support each project, as well as to post comments. Projects can be sorted by cost, location, and most/least critical (based on user ratings).

In addition, the Ocean State Policy Research Institute is developing a site dedicated to transparency in public school spending, which it plans to launch later this year.

Multi-Measure Budget Transparency Profile

The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for Rhode Island, which measures state transparency as of September 2011 using indicators from a range of organizations. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.[34][35]

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[36][37]

Budget background

Rhode Island's fiscal year begins July 1 and ends June 30 of the following year. According to the state Constitution, every year the Governor must present a spending recommendation to the Legislature. However, prior to the Governor's presentation to the Legislature on the third Thursday in January, the Governor reviews individual agency requests along with past and present expenditure and revenue data. Both the Senate and the House use the following months to making necessary adjustments to the proposed budget bill. Once both houses approve a final budget the bill returns to the Governor who may veto legislative appropriations. The Legislature may override any veto by a two-thirds majority vote. [38]

Accounting principles

See also:Rhode Island government accounting principles

The Office of the Auditor General (OAG) is the State of Rhode Island's legislative audit agency, conducting financial and performance audits to provide independent information to the General Assembly on a variety of topics including the State's financial condition, its use of federal funds in compliance with federal law and regulations, and whether programs are operating efficiently and effectively. The OAG's audit reports are published online. The Institute for Truth in Accounting (IFTA) rates Rhode Island “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Rhode Island's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.[39] Rhode Island's CAFRs are annual publications of the Rhode Island Office of Accounts and Control under Marc A. Leonetti as State Controller. Despite the tardiness of previous CAFRs, the Office of Accounts and Control already has posted the preliminary 2009 CAFR on its Web site.[40]

The Office of Accounts and Control is responsible for the financial integrity and accountability of state government through sound administrative and accounting controls and procedures. The office is also responsible for the preparation and/or coordination of several publications, including the Comprehensive Annual Financial Report, Condensed State Financial Report, State Payroll Manual, Procedural Handbook of the Department of Administration, and the Consolidated Statewide Cost Allocation Plan.[41]

Credit Rating Fitch Moody's S&P
Rhode Island[42] AA- Aa3 AA[43]


Rhode Island received $1.03 billion in federal stimulus funding between February 2009 and June 2013.[44]

Public Employees

See also: Rhode Island public employee salaries]] and Rhode Island public pensions

According to 2011 Census data, the state of Rhode Island and local governments in the state employed a total of 23,783 people.[45] Of those employees, 17,056 were full-time employees receiving a net pay of $93.5 million per month and 6,727 were part-time employees paid $6.8 million per month.[45] More than 55% of those employees, or 33,310 employees, were in education or higher education.[45]

External links

Additional reading


  1. 1.0 1.1 1.2 1.3 the Providence Journal "Senate approves $8.1-billion state budget" June 11, 2012
  2. The Providence Journal "R.I. Gov. Chafee says state budget 'by no means a perfect' one" June 15, 2012
  3. National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting" April 2011
  4. State Budget Solutions "State Budget Solutions' third annual State Debt Report shows total state debt over $4 trillion" Aug. 28, 2012
  5. State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
  6. State Budget Solutions "State debt more than $37,000 per private worker, $13,000 per capita" Oct. 2, 2012
  7. Yahoo, The Best- and Worst-Run States in America, Nov. 27, 2012
  8. US Census Federal Aid to State and Local Governments
  9. Tax Foundation' "Monday Map: Federal Aid to State Budgets. Accessed October 15, 2013
  10. The Providence Journal "R.I. Gov. Chafee says state budget 'by no means a perfect' one" June 15, 2012
  11. The Boston Globe "RI Senate passes $7.7 billion state budget" June 29, 2011
  12. FY2013 House Budget
  13. 13.0 13.1 13.2 13.3 13.4 13.5 The Providence Journal "R.I. budget: House approves new $8.1 billion tax and spending plan" June 8, 2012
  14. The Providence Journal "House committee approves $8.1 billion budget plan that boosts school aid, hikes cigarette taxes" June 1, 2012
  15. 15.0 15.1 The Huffington Post "RI lawmakers to review budget proposal" Feb. 28, 2012
  16. The Boston Globe "RI Senate passes $7.7 billion state budget" June 29, 2011
  17. 17.0 17.1 17.2 The Boston Globe "RI governor signs $7.7B state budget" June 30, 2011
  18. FY2012 Budget
  19. The Providence Journal "R.I. revenues improve; deficit still looms" Nov. 11, 2010
  20. CBSNews.com "States eye fee increases as alternative to taxes" July 23, 2011
  21. CBSNews.com "States eye fee increases as alternative to taxes" July 23, 2011
  22. CBSNews.com "RI cities and towns plead for help from state" Jan., 2012
  23. The Boston Globe "RI Senate passes $7.7 billion state budget" June 29, 2011
  24. 24.0 24.1 24.2 24.3 The Providence Journal "New twist on sales tax" June 18, 2011
  25. The Boston Globe "State budget office orders 15 percent cuts" Nov. 29, 2010
  26. Business Week, RI Gov. Chafee wants lower, broader sales tax, March 11, 211
  27. Providence Journal, Moody's Says Chafee Budget Good for Cities, Towns, March 15, 2011
  28. Rhode Island State Treasurer, How much did this project cost?
  29. 29.0 29.1 Rhode Island.gov, Treasurer Caprio Debuts State's First Ever Online, Real-time Checkbook of State Spending, Feb. 9, 2009
  30. Rhode Island Treasurer, 2009 Budget
  31. RI.gov, "Department of Administration Launches Transparency Portal," 02/16/2009
  32. Rhode Island Transparency Portal
  33. Transparency Train
  34. Institute of Government and Public Affairs
  35. University of Illinois Transparency Profile for Rhode Island
  36. [ University of Illinois 50 State Transparency Comparison
  37. University of Illinois State Transparency Profiles
  38. State of Rhode Island,"Budget process primer," retrieved April 19,2009
  39. Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  40. Rhode Island Office of Accounts and Control Web site, retrieved November 10, 2009
  41. Rhode Island Office of Accounts and Control Web site, retrieved November 10, 2009
  42. State of Indiana, “State Credit Ratings-as of June 24, 2009"
  43. Pew Stateline Infographic on State Credit Ratings. Accessed September 19, 2013
  44. Recovery, "Stimulus Spending by State"
  45. 45.0 45.1 45.2 2011 Rhode Island Public Employment U.S. Census Data