On Tuesday, October 13, 2009, RIPEC released “How Rhode Island’s State and Local Expenditures Compare, 2009 Edition”, a companion report to “How Rhode Island’s State and Local Revenues Compare”. The report compares Rhode Island’s expenditures – per $1,000 of personal income and per capita – with those of the other 49 states and the United States average. This year’s report includes data for both fiscal years 2007 and 1997, based on the United States Census Bureau, Government Finance data. FY 2007 is the latest year for which national data are available.
The report finds that Rhode Island continues to have higher direct general expenditures than the national average and, similar to past years, devotes more resources to elementary and secondary education, social services and public safety than most other states. Conversely, the Ocean State spent significantly less than the national average on higher education, transportation, and environment/housing. These spending patterns, as with state and local revenue patterns, reflect policy choices made by the state and municipalities over the past decade. For example, the cost of education in the state is largely borne by municipalities, which, in part, is a significant driver of the property tax burden.
As is the case throughout the country, the two largest expenditure categories were elementary and secondary education and Medicaid/vendor payments. However, in Rhode Island these two categories accounted for 46.0 percent of all FY 2007 expenditures while nationally they accounted for 37.9 percent of all state and local spending, with the Medicaid/vendor payments accounting for almost the entire difference.
Further, the report finds that expenditures for Medicaid/vendor payments are the primary driver of expenditure growth in Rhode Island – while they accounted for just 10.9 percent of the state’s budget in FY 1997, Medicaid/vendor payments were 20.9 percent of all direct general expenditures in FY 2007. The state’s Medicaid/vendor payment expenditures increased in relative terms as well; in FY 1997 Rhode Island ranked 20th highest per $1,000 of personal income in FY 1997, whereas the state ranked 4th highest in FY 2007.