Today, July 19, 2010, RIPEC will release its annual report “How Rhode Island Revenues Compare”, which provides details on state and local government revenue sources for fiscal year 2008, the latest year for which national data are available. The publication compares Rhode Island’s fiscal system with those of the other 49 states and the United States average using data released by the US Census Bureau on July 14, 2010.
Rhode Island continues to have one of the highest tax burdens in the country, ranking 17th highest as a share of personal income in FY 2008. However, Rhode Island’s national ranking has steadily improved over the past few years. In FY 2007, the Ocean State’s taxes as a share of personal income were 15th highest in the country while in FY 2006 the state’s total tax burden per $1,000 of personal income was the 10th highest in the country.
As in past years, Rhode Island continues to rely more on property taxes to support state and local government than the rest of the country. Over the years, the state has made policy choices that, while successfully reducing resident’s total tax burdens have resulted in an increased reliance on the property tax. Between FY 2007 and FY 2008, both individual income tax collections and general sales tax collections as a share of personal income declined while property tax collections have increased. As a result, property taxes in the state accounted for 42.3 percent of total tax collections in FY 2008, compared to 41.0 percent the year prior.
In addition, of the three major taxes (property, income and sales), the property tax was the only one to increase over the past decade (when measured as a share of personal income). From FY 1998 to FY 2008, individual income tax collections per $1,000 of personal income declined by 7.2 percent, while sales tax collections remained relatively unchanged, increasing by 0.8 percent.
This year’s report also includes additional tables on non-general revenues (funds derived from government-run liquor stores and utilities, and social insurance trusts. Of note, investment losses in many insurance trust systems across the country in 2008 had a significant effect on total state and local government revenue collections. Between FY 2007 and FY 2008, total revenues declined by 16.0 percent in Rhode Island, almost entirely as a result of investment losses related to social insurance trusts. Nationally, total revenues fell by 13.1 percent due to investment losses over the fiscal year.
