Today, December 1, 2011, RIPEC released its annual report: How Rhode Island Expenditures Compare, which provides details on  state and local government expenditures in FY 1999 and FY 2009, the latest year for which national data are available.  This year’s report also includes an analysis of the changes between FY 2008 and FY 2009.  The publication compares Rhode Island’s spending with those of the other 49 states and the national average using data released by the US Census Bureau on October 31, 2011.  To see the full report, click here.

Direct general expenditures (total expenditures excluding utility, liquor store and insurance trust spending, and intergovernmental transfers to the federal government) account for the vast majority of government spending.  In FY 2009, state and local direct general expenditures in Rhode Island were $205.53 per $1,000 of personal income, compared to $203.26 per $1,000 of personal income nationally.  Per capita expenditures were $8,465 in Rhode Island, 4.0 percent higher than the national average of $8,132 per capita.  Rhode Island’s direct general expenditures were the 26th highest in the country when measured as a share of personal income, and 16th highest on a per capita basis.

The bulk of state and local spending, both nationally and in Rhode Island, is for education/libraries and social services/income maintenance.  These two categories accounted for roughly 60 percent of FY 2009 expenditures in the state and around the country.  However, spending on subcategories in these two areas differs between Rhode Island and the US average.  Specifically, vendor payments, a subcategory of social services/income maintenance that is predominantly payments for services provided under the Medicaid program, accounted for a significantly larger share of Rhode Island spending compared to the rest of the country.  In FY 2009, spending on vendor payments accounted for 21.1 percent of state and local spending in Rhode Island, compared to 13.1 percent nationally.   

Additionally, the report finds that between FY 1999 and FY 2009, total (unadjusted) US state and local direct general expenditures increased by 77.0 percent, or $1.1 trillion, to $2.5 trillion.  In Rhode Island, FY 2009 state and local direct general expenditures of $8.9 billion represented an increase of $3.6 billion, or 68.9 percent over the decade.  Increases in spending for elementary and secondary education, and vendor payments accounted for the largest shares of the increase, both nationally and in Rhode Island.  Together, these two categories accounted for 58 cents of every dollar increase in direct general expenditures in Rhode Island, compared to 39 cents of every additional dollar nationally.

Between FY 2008 and FY 2009, direct general state and local expenditures in Rhode Island decreased by 0.5 percent, compared to a 3.1 percent increase nationally.  All categories of direct general expenditures, with the exception of government administration/interest on general debt and “other” decreased year-over-year in the Ocean State.  Nationally, environment and housing was the only Census-defined category in which expenditures declined between the two years.  Total expenditures, including utility, liquor store, insurance trust and intergovernmental expenditures, increased by 0.8 percent in Rhode Island, and by 4.5 percent across the US as a whole.  

Unemployment insurance, a subcategory of social insurance trust increased significantly year-over-year.  Nationally, unemployment compensation increased by $30.6 billion, or 86.0 percent, between FY 2008 and FY 2009.  This increase accounted for roughly 75 percent of the growth in social insurance trust spending.  In Rhode Island, unemployment compensation increased by $126.0 million (50.6 percent), accounting for 113.0 percent of the increase in social insurance trust spending (offset by declines in other social insurance trust spending).

John Simmons, Executive Director of RIPEC said “these trends reflect the economic condition of Rhode Island, and policy choices made by the state, relative to the rest of the country.”  He added, “The data show the first impact of the fiscal crisis on state and local budgets, and we anticipate future data will demonstrate the depth of the economic downturn in Rhode Island compared to our peer states and the national average.”

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