PROVIDENCE – On Tuesday, June 4, RIPEC will release its comments on the May 2013 Revenue and Caseload Estimating Conferences, and their projected impact on the FY 2014 budget. The May Conference decreased revenue estimates for FY 2013. At the same time, projected medical assistance expenditures from general revenues also decreased. Taken together, the estimates from the May REC/CEC result in a change in the projected surplus by roughly $40 million for the current fiscal year. However, FY 2014 revenues are projected to be $51.2 million less than estimated at the November REC, with a decrease in medical assistance expenditures from general revenues of $8.9 million. The full report is available here.
Testimony suggests that the state’s economic recovery is uneven, as projections for employment and personal income growth were revised downward for FY 2014. The lagging recovery can also be seen in Rhode Island’s residual unemployment, underemployment, and shrinking population. Employment has not yet rebounded to the pre-Great Recession peak in Rhode Island. Beyond the state’s current economic conditions, there are several variables that will undoubtedly exert pressure on the out-year budgets, including full ACA implementation, the outcome of the state’s pension reform litigation, the location of Massachusetts’s table gaming, and federal spending reductions.
In this economic climate, it is clear that that Rhode Island can ill afford to rely on the rising tide of national economic recovery to generate economic activity. To this end, the Senate and the House have introduced a variety of bills advancing an economic agenda to improve Rhode Island’s competitiveness and business climate. The House proposal takes an additional systemic step by including a responsibility for commerce in state government. Combined, both packages, and other pending legislation, would systematically change the way in which business is done in Rhode Island. Legislative action to enact the bills prioritizing the restructuring of Rhode Island’s economic development efforts complements a balanced and disciplined budget. A comprehensive set of actions is necessary; otherwise the state will continue to see undesirable economic outcomes.