PROVIDENCE, R.I. – The Rhode Island Public Expenditure Council (RIPEC) released their report “Municipal Services in Rhode Island: How Cities and Towns Spend Their Money” today. The fourth in a series on municipal finance, the report analyzes how municipalities allocate resources across non-education services, such as public safety, public works, and administration, and offers policy recommendations for consideration at both the state and local level.
“Our report finds that Rhode Island’s local governments are spending much more than regional and national benchmarks on certain services, particularly public safety, while underinvesting in other important areas,” said RIPEC President and CEO Michael DiBiase.
RIPEC’s analysis found that municipal expenditures on non-education services represent a substantial investment of taxpayer dollars—$2.75 billion as of FY 2020. However, due in part to a lack of county governments—a highly uncommon approach to local governance—municipalities in Rhode Island collectively spend less overall relative to local governments in other states; total local government spending in the Ocean State ($4,887 per capita) ranked FY 35th highest among states in FY 2020. At the individual municipal level, non-education spending varies widely across the state due to several factors, including the range of services that cities and towns provide and stark inequalities in property wealth, which implicate the ability to raise funds through property taxes.
Public safety functions make up a significant portion—50.0 percent as of FY 2021—of non-education expenditures by Rhode Island municipalities. Spending by Rhode Island local governments on police in FY 2020 ($375 per capita) ranked seventh highest among all states. At the municipal level, several cities and towns had per capita spending more than 20 percent greater than the statewide per capita total. Additionally, local governments in Rhode Island were significant outliers in terms of spending and staffing on fire protection—ranking third among states in spending ($297 per capita) and first among states in firefighter staffing per capita in FY 2020.
While Rhode Island municipalities significantly overspend on public safety relative to other states, RIPEC found a relative lack of resources dedicated to other core services. Although Rhode Island’s combined state and local spending on public works is comparable to the region and nation, local governments take on a much smaller proportion of spending than in other states, particularly on roads and highways, where Rhode Island’s local per capita spending ranked fourth to last nationally in FY 2020. Municipalities also underinvest in parks, recreation, and natural resources relative to local governments in other states—on a per capita basis, Rhode Island’s local government spending ($57) ranked fourth lowest nationally in FY 2020.
RIPEC also found that mandates passed at the state level affect municipal staffing and spending in certain services. Additionally, RIPEC concluded that Rhode Island’s local governments are fragmented, with cities and towns that are relatively small in area and population providing similar or identical services to neighboring municipalities, and that such fragmentation is frequently linked to higher per capita spending.
“Rhode Island has historically had a culture of strong local control, which has led to a fragmented and inefficient system for providing services,” DiBiase said. “Ten of the state’s 39 municipalities have fewer than 10,000 fulltime residents, leading in many cases to relatively high per capita spending on certain services. Research suggests there is an opportunity for Rhode Island’s cities and towns to be more efficient by consolidating or sharing services where appropriate.”
Given these findings, RIPEC offers to policymakers the following recommendations:
Municipalities should seek to at least slow the growth of expenditures on police and fire departments and require that departments publish data on calls for service (CFS) annually to make more informed decisions about staffing and budgets. Rhode Island’s municipalities should aim to bring expenditures on public safety more in line with national and regional benchmarks.
Municipalities should pursue, and the General Assembly should incentivize, consolidation or shared services agreements. Research suggests that consolidation or shared service agreements may be appropriate for Rhode Island’s least-populous municipalities. To make progress in this area, the state should be more aggressive in incentivizing these agreements.
The General Assembly should avoid enacting mandates which limit municipalities’ financial flexibility without careful consideration of costs.
Municipalities should increase their investment into public works. In addition to roads and highways, where local governments in Rhode Island spend relatively little, solid waste management should also be a point of focus.
Municipalities should increase their investment in parks, recreation, and natural resources. Outside of several coastal communities, which generally have the highest per capita spending on parks and recreation, municipalities should increase spending in this area to make up for systemic underinvestment at both the state and local levels.
The state should continue making improvements to the Municipal Transparency Portal (MTP) to allow for a more complete analysis of municipal service spending. The state Division of Municipal Finance should seek to make continuous improvements to this important data tool, with additional statutory and financial support from the General Assembly.