Rhode Island state budget and finances

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Rhode Island budget and finances

General information

Budget calendar: Annual

Fiscal year: 2017

State credit rating: AA (as of 2017)

Current governor: Daniel McKee

Financial figures

Total spending (state and federal funds): $9,662,000,000 (estimated 2016)

Per capita spending: $9,146 (estimated 2016)

Total state tax collections: $3,265,727,000 (2016)

Per capita tax collections: $3,091 (2016)

State debt: $9,004,835,000 (2014)

Per capita state debt: $8,530 (2014)

State budget and finance pages • Total state expenditures • State debt • Tax policy in Rhode Island

Note: In comparing dollar amounts across the states, it is important to note that the cost of living can differ from state to state and within a state. The amounts given on this page have not been adjusted to reflect these differences. For more information on "regional price disparities" and the Consumer Price Index, see the U.S. Department of Commerce, Bureau of Economic Analysis. This article, which is updated on an annual basis, was last updated in June 2017. It contains information from several sources; consequently, the currency of the information can vary from source to source.

In Rhode Island, as in other states, lawmakers and public officials are elected in part to manage the state's finances. This includes generating revenues (money coming into the state from various sources) and approving expenditures (the money spent on governmental functions and servicing state debt). State budgets are complex and fluid, as they depend on anticipated revenues and planned expenditures, which may alter over the course of a fiscal year. If revenues do not keep pace with expenditures, states generally have to raise taxes, cut services, borrow money, or a combination of the three. State budget decisions are also influenced by policy decisions at the national level, such as the Affordable Care Act or energy and environmental regulations, and issues at the local level, such as crime and the quality of education.

HIGHLIGHTS

Between fiscal years 2015 and 2016, total government spending in Rhode Island decreased by approximately $130.0 million—from $9.8 billion in fiscal year 2015 to an estimated $9.7 billion in 2016. This represents a 1.3-percent decrease.

In Rhode Island in fiscal year 2015, 51 percent of total tax revenues came from sales taxes and gross receipts. Income taxes accounted for 42.3 percent of total state tax collections.

Education accounted for 23.6 percent of state expenditures in fiscal year 2015, while 25.1 percent went to Medicaid.

Definitions

The following terms are used to describe a state's finances:

• Revenues come mainly from tax collections, licensing fees, federal aid, and returns on investments.
• Expenditures generally include spending on government salaries, infrastructure, education, public pensions, public assistance, corrections, Medicaid, and transportation.
• State debt refers to the money borrowed to make up for a deficit when revenues do not cover spending.
• The state credit rating is the grade given by a credit rating agency based on the general financial health of the state's government and economy.
• State funds include general and other state-based funds. A general fund is "the predominant fund for financing a state's operations." Other state funds are "restricted by law for particular governmental functions or activities."
• Federal funds are "funds received directly from the federal government."
• Total spending is calculated by adding together the totals for state and federal funds used for expenditures.

Revenues

2016 revenues

See also: State government tax collections by source

The table below breaks down state government tax collections by source in 2016 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "2016 population" and "Per capita collections" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "2016 population" and "Per capita collections" have not been abbreviated.

State tax collections by source ($ in thousands), 2016
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes	Total	2016 population	Per capita collections
Rhode Island	$2,544	$1,665,438	$120,936	$1,380,463	$96,346	$3,265,727	1,056,426	$3,091
Connecticut	N/A	$6,149,782	$455,454	$8,276,620	$363,091	$15,244,947	3,576,452	$4,263
Massachusetts	$5,818	$8,683,866	$1,122,219	$16,764,223	$706,879	$27,283,005	6,811,779	$4,005
New Hampshire	$406,394	$982,832	$329,549	$788,210	$134,961	$2,641,946	1,334,795	$1,979
United States	$18,364,298	$442,909,995	$52,164,396	$392,286,910	$24,538,146	$930,263,745	322,762,018	$2,882.20
Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed June 26, 2017

The table below lists 2016 tax collections by source as percentages of total collections. About 51 percent of Rhode Island's total state tax collections came from sales taxes and gross receipts.

State tax collections by source (as percentages), 2016
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes
Rhode Island	0.1%	51.0%	3.7%	42.3%	3.0%
Connecticut	N/A	40.3%	3.0%	54.3%	2.4%
Massachusetts	0.0%	31.8%	4.1%	61.4%	2.6%
New Hampshire	15.4%	37.2%	12.5%	29.8%	5.1%
Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed April 4, 2016

Federal aid to the state budget

See also: Federal aid to state budgets

State governments receive aid from the federal government to fund a variety of joint programs, mainly in the form of grants for such things as Medicaid, education, and transportation. In 2014, federal aid to the states accounted for roughly 31 percent of all state general revenues. Federal aid varies from state to state. For example, Mississippi received approximately $7.2 billion in federal aid in 2014, accounting for about 41 percent of the state's general revenues, the highest percentage of all of the states. By contrast, North Dakota received about $1.5 billion in federal aid in 2014, or just 17 percent of the state's general revenues, the lowest percentage in the nation.

The table below notes what share of Rhode Island’s general revenues came from the federal government in 2014. That year, Rhode Island received approximately $2.5 billion in federal aid, 34.7 percent of the state's general revenues. Taking into consideration the state's 2014 population, this came out to about $2,341 in federal aid per capita. Figures from surrounding states are provided for additional context.

Federal aid to state budgets, 2014
State	Total federal aid ($ in thousands)	Federal aid as a % of general revenues	Ranking (by % of general revenues)	Est. 2014 population	Aid per capita
Rhode Island	$2,468,471	34.7%	16	1,054,480	$2,341
Connecticut	$6,349,942	24.6%	47	3,591,873	$1,768
Massachusetts	$13,658,836	27.8%	37	6,749,911	$2,024
New Hampshire	$1,658,713	28.0%	36	1,328,743	$1,248
Sources: United States Census Bureau, "2014 State and Local Government Finances," accessed June 26, 2017 Note: Per-capita figures were generated by Ballotpedia by dividing total federal aid for the state by the estimated population of that state in 2014.

Spending

Estimated 2016 expenditures

See also: Total state expenditures

The table below breaks down estimated spending totals for fiscal year 2016 (comparable figures from surrounding states are included to provide additional context). Figures for all columns except "Population” and “Per capita spending" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the columns labeled "Population” and “Per capita spending" have not been abbreviated.

The total estimated government spending in Rhode Island in fiscal year 2016 was $9.7 billion.

Total estimated state spending, FY 2016 ($ in millions)
State	State funds	Federal funds	Total spending	Population	Per capita spending
Rhode Island	$6,597	$3,065	$9,662	1,056,426	$9,146
Connecticut	$24,964	$6,122	$31,086	3,576,452	$8,692
Massachusetts	$50,652	$9,751	$60,403	6,811,779	$8,867
New Hampshire	$3,623	$2,162	$5,785	1,334,795	$4,334
Per-capita figures are calculated by taking the state's total spending and dividing by the number of state residents according to United States Census Bureau estimates. Source: National Association of State Budget Officers, "State Expenditure Report (Fiscal 2014-2016)," accessed June 26, 2017

Spending by function

See also: State spending by function as a percent of total expenditures

State spending in Rhode Island can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2015 information is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percentages, indicating the share of the total budget spent per category.

In fiscal year 2015, other spending accounted for 42.1 percent of Rhode Island's total expenditures.

State spending by function as a percent of total expenditures, FY 2015
State	K-12 education	Higher education	Public assistance	Medicaid	Corrections	Trans- portation	Other
Rhode Island	12.6%	11.0%	1.1%	25.1%	2.2%	5.9%	42.1%
Connecticut	14.5%	10.0%	1.3%	23.6%	2.5%	9.5%	38.5%
Massachusetts	11.6%	10.1%	2.1%	23.8%	2.4%	9.1%	41.0%
New Hampshire	20.7%	2.4%	1.3%	29.7%	2.1%	9.4%	34.4%
Source: National Association of State Budget Officers Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."

Spending trends

The table below details the spending trends in Rhode Island in previous years. Figures are rendered as percentages, indicating the share of the total budget spent per category.

Spending by function from 2010 to 2015 (as percentages)
Year	K-12 education	Higher education	Public assistance	Medicaid	Corrections	Transportation	Other
2015	12.6%	11.0%	1.1%	25.1%	2.2%	5.9%	42.1%
2014	13.4%	12.0%	1.2%	24.8%	2.3%	6.3%	39.9%
2013	14.9%	13%	1.4%	24.8%	2.6%	6.3%	37%
2012	14.2%	13.2%	1.4%	25.0%	2.4%	6.5%	37.4%
2011	14.4%	12.4%	1.4%	25.9%	2.3%	4.9%	38.7%
2010	14.1%	11.8%	1.5%	25.0%	2.2%	5.3%	40.1%
Source: National Association of State Budget Officers Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."

State debt

See also: Rhode Island state debt

State debt refers to any debt owned by a state government. Debt may include any financial obligations a state has that have not been paid, such as bonds issued by state governments, money borrowed by a state government that has not been repaid, or post-retirement benefits promised to state employees. According to the U.S. Census Bureau, Rhode Island had a debt of $9,004,835,000 in fiscal year 2015. The state debt per capita was $8,530. This ranked Rhode Island 27th among the states in debt and third in per capita debt. The total state debt owned by the 50 states was $1.15 trillion with a per capita debt of $3,582.

Economic indicators

See also: Economic indicators by state

Rhode Island's GDP increased by 1.2 percent in 2014. Click the image to view a larger version.

Broadly defined, a healthy economy is typically one that has a "stable and strong rate of economic growth" (gross state product, in this case) and low unemployment, among many other factors. The economic health of a state can significantly affect its healthcare costs, insurance coverage, access to care, and citizens' physical and mental health. For instance, during economic downturns, employers may reduce insurance coverage for employees, while those who are laid off may lose coverage altogether. Individuals also tend to spend less on non-urgent care or postpone visits to the doctor when times are hard. These changes in turn may affect the decisions made by policymakers as they react to shifts in the industry. Additionally, a person's socioeconomic status has profound effects on their access to care and the quality of care received.

Between 2011 and 2013, the median annual household income in Rhode Island was $55,158, lowest among its neighboring states but higher than the national average. Most residents in Rhode Island earned incomes above 400 percent of the federal poverty level. In September 2014, Rhode Island had the highest unemployment rate of its neighboring states, 7.6 percent.

Note: Gross state product (GSP) on its own is not necessarily an indicator of economic health; GSP may also be influenced by state population size. Many factors must be looked at together to assess state economic health.

Various economic indicators by state
State	Distribution of population by FPL* (2013)				Median annual income (2011-2013)	Unemployment rate		Total GSP (2013)†
	Under 100%	100-199%	200-399%	400%+		Sept. 2013	Sept. 2014
Rhode Island	14%	20%	25%	42%	$55,158	9.5%	7.6%	$53,184
Connecticut	11%	13%	26%	50%	$67,807	7.7%	6.4%	$249,251
Massachusetts	12%	15%	24%	49%	$64,555	7.2%	6%	$446,323
New Hampshire	9%	13%	29%	49%	$69,888	5.2%	4.3%	$67,848
United States	15%	19%	30%	36%	$52,047	7.2%	5.9%	$16,701,415
* Federal Poverty Level. "The U.S. Census Bureau's poverty threshold for a family with two adults and one child was $18,751 in 2013. This is the official measurement of poverty used by the Federal Government." † Median annual household income, 2011-2013. ‡ In millions of current dollars. "Gross State Product is a measurement of a state's output; it is the sum of value added from all industries in the state." Source: The Henry J. Kaiser Family Foundation, "State Health Facts"

Budget process

State documents and agenciesBelow are links to official Rhode Island budget and financial documents. The first is the state's Comprehensive Annual Financial Report (CAFR). A CAFR is a detailed presentation of a government entity's financial condition. This includes fiscal activities and balances for a fiscal year. The second link is to the state's relevant budget agency or office. Rhode Island CAFR Rhode Island budget agency

The state operates on an annual budget cycle. The sequence of key events in the budget process is as follows:

1. Budget instructions are sent to state agencies in July of the year preceding the start of the new fiscal year.
2. Agencies submit their budget requests to the governor by October 1.
3. Agency hearings are held in November and December.
4. The governor submits his or her proposed budget to the state legislature in January. A newly elected governor has until the first Thursday in February.
5. The legislature typically adopts a budget in June. The fiscal year begins July 1.

In Rhode Island, the governor has no veto authority over the budget.

The governor is constitutionally required to submit a balanced budget proposal. Likewise, the legislature is required to pass a balanced budget.

Agencies, offices, and committees

The following standing committees in the Rhode Island State Legislature deal with budget and finance matters:

1. Finance Committee, Rhode Island House of Representatives
2. Finance Committee, Rhode Island State Senate

Public Interest Research Group 2016 report

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2016. The report, entitled "Following the Money," measured how transparent and accountable state websites were with regard to state government spending. According to the report, Rhode Island received a grade of B- and a numerical score of 81.5, indicating that Rhode Island was "Advancing" in terms of transparency regarding state spending.

Noteworthy events

• A debate over motor vehicle taxes between Democratic leadership in the Rhode Island state Senate and House led Rhode Island to enter the 2018 fiscal year without a budget in place. Leading up to the deadline on June 30, 2017, House Speaker Nicholas Mattiello (D) had advocated for a six-year-phase repeal of motor vehicle taxes in Rhode Island. The House approved the repeal in a budget plan—which also included a proposal backed by Gov. Gina Raimondo (D) for tuition-free community college—on June 23, 2017, in a 64-11 vote. When the Senate took up the budget on June 30, 2017, it voted 30-5 in favor of an amendment that would suspend the car-tax repeal if state revenues prove lower than projected or if the economy declined. Mattiello protested the amendment, calling it a last-minute change and dismissed the House for summer recess before a vote could take place. Senate President Dominick Ruggerio (D) stated that Mattiello was aware of concerns voiced in the Senate about the financial sustainability of repealing the motor vehicle tax. Mattiello later said he had no plans to call the House back from recess.
• In a press conference on July 5, Raimondo stated that she intended to find new revenue sources to cover the $2.75 million needed for the free community college plan that she supported throughout the regular session. She also criticized the Legislature over its standoff.
• On July 6, 2017, Ruggerio stated in an op-ed that the House proposal for the motor vehicle tax repeal did not do enough to protect the state’s rainy day fund, and he called on Mattiello to call the House back into session:

“

The budget adopted by the House of Representatives did not protect the state’s rainy day fund from Speaker Nicholas Mattiello’s car tax phaseout in the event of a future recession or cuts to federal aid. … No one, not even the speaker, wants to see this phaseout succeed more than I. … We encourage the speaker to reconvene the House to take up these matters. In the meantime, the Senate will thoroughly review all legislation that comes before us and pass that which we deem is in the best interest of all Rhode Islanders.

”

• On July 8, Mattiello released his own op-ed, in which he stated that Ruggerio had backed out of a deal and that the Senate amendment was neither needed nor appropriate:

“

It is unfortunate that Senate President Dominick Ruggerio and his leadership team reneged on a commitment to pass the state budget as negotiated, and did so at the eleventh hour, without warning. These last-minute shenanigans only increase public distrust and threaten our ability to serve citizens responsibly. … The Senate’s budget amendment would stop the car-tax phaseout if a very specific series of events occurred. This limit does not apply to any other budget measure, nor is it appropriate in this case. Future legislatures will consider the full array of state spending and revenues when facing any downturn. I do not favor language that, at the outset, would subordinate car-tax relief to other priorities.

”

• Mattiello and Ruggerio held a meeting on July 18, 2017. After the meeting, both released statements describing it as productive. Rhode Island Public Radio reported that Ruggerio was considering having the Senate take up the original House version of the budget without the Senate amendment. Mattiello, on the other hand, was reportedly considering holding a special session in the Fall to consider other legislative initiatives that the budget standoff held up.
• The standoff concluded on August 3, 2017. After a series of meetings in late July and early August, Mattiello and Ruggerio reached an agreement in which the state Senate would pass the original budget without the amendment if the state House agreed to pass legislation requiring the state Department of Revenue to conduct an annual study of tax repeal beginning in 2021. The Senate vote was 30-5. Gov. Gina Raimondo (D) signed the budget shortly after receiving it.

Background information

• In 2004, Rhode Island enacted a law allowing the state to continue operating at the previous year’s spending levels when a budget is not passed by the June 30 deadline.
• In Rhode Island, the governor has the power to call the Legislature into a special session. In 2017, the legislature was in session from January 3 through June 30.
• An annual motor vehicle excise tax in Rhode Island fluctuates among municipalities in the state. It is highest in Providence—Rhode Island’s biggest city—where residents pay $60 for every $1000 that the vehicle is worth. Revenue generated from car taxes provides roughly $220 million per year for Rhode Island municipalities. That money accounts for as much as 14 percent of a town’s revenue, on the high end, and as low as 2.9 percent on the low end. Earlier in 2017, Raimondo proposed an alternative to the full repeal supported by Mattiello. She advocated for a 30 percent cut to the tax.
• The budget standoff left several other pieces of legislation in limbo, including a proposal granting paid sick leave for private sector employees and a proposal to limit access to firearms for individuals with histories of domestic abuse. Groups such as the National Rifle Association campaigned against the latter measure.

Budget and finance ballot measures

Voting on state and local government budgets, spending, and finance
Policy
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See also: State and local government budgets, spending and finance on the ballot and List of Rhode Island ballot measures

Ballotpedia has tracked the following ballot measures relating to state and local budget and financial matters in Rhode Island.

1. Rhode Island Question 3, Budget Reserve Account Act (2006)

Budget and finance legislation

The following is a list of recent budget and finance bills that have been introduced in or passed by the Rhode Island state legislature. To learn more about each of these bills, click the bill title. This information is provided by BillTrack50 and LegiScan.

Note: Due to the nature of the sorting process used to generate this list, some results may not be relevant to the topic. If no bills are displayed below, no legislation pertaining to this topic has been introduced in the legislature recently.

Recent news

The link below is to the most recent stories in a Google news search for the terms Rhode Island budget. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

Rhode Island state budget and finances - Google News

See also

• Historical Rhode Island budget and finance information
• Tax policy in Rhode Island
• Rhode Island government sector lobbying
• Rhode Island public pensions
• Governor of Rhode Island
• Rhode Island State Senate
• Rhode Island House of Representatives
• Rhode Island State Legislature