Through this extended budget season, RIPEC brings you a brief update on the major public policy issues impacting Rhode Island

RIPEC on Public Policy

• RIPEC’s report analyzing the May 2020 Consensus Revenue Estimating Conference warned that the Ocean State may experience a long-term shortfall in general revenues due to the COVID-19 pandemic, well beyond the $298.7 million loss projected between fiscal year (FY) 2019 and FY 2021.

• RIPEC’s latest policy brief found that elements of the administration’s plan to shore up the state’s flagging RIte Share program—through which the state covers out-of-pocket expenses on employer-sponsored health insurance for Medicaid-eligible employees and their families—raises several questions worth considering.

• The Current Economic Indicator Briefing, jointly released by RIPEC and the Center for Global and Regional Economic Studies at Bryant University, estimated that the historic contraction of economic activity in Rhode Island during the second quarter of 2019 was more severe than that of the New England region and the United States.
  • Providence Business News, “Report: R.I. GDP contracts at 40.6% annualized rate in Q2.”
  • Providence Journal, “Report: R.I. Economy saw ‘historic’ contraction in 2nd quarter.”

• Pointing out that the federal Coronavirus Relief Fund is “one time money,” RIPEC President and CEO Michael DiBiase said that Rhode Island needs to get serious about curtailing spending in an appearance on WPRI’s Newsmakers.

• In a Providence Journal interview and the “Reinvesting in Rhode Island after COVID” interactive webinar jointly convened by RIPEC and Bryant University’s Hassenfeld Institute, Michael DiBiase called for strategic borrowing for capital investments to help “stimulate the local economy and speed the recovery.”

• Responding to a proposal from House Speaker Nicholas Mattiello to ask voters to change the state constitution to increase Rhode Island’s rainy day fund from 5 to 10 percent of general revenues over the next decade, Michael DiBiase told WPRI that a 10 percent reserve is a “responsible” goal but warned against phasing in the increase as the state recovers over the “next two or three fiscal years.” RIPEC analyzed the rainy day fund in two recent reports on the fiscal impact of COVID-19, one that focused on federal assistance and another that dug into the FY 2020 supplemental budget.

Inside Insights

• With some exceptions, state approved local education agency plans for K-12 school reopening were made public on July 31. Whether schools largely resume in-person learning, continue to engage in distance learning, or pursue a combination of the two remains up in the air, however.

• How does Rhode Island spending of federal Coronavirus aid compare to the rest of the country? The U.S. Treasury has released an interim report of costs incurred and the National Council on State Legislatures has compiled an interactive database of Coronavirus Relief Fund actions that together begin to address this issue.

What to Look for in August

• Now over a month into the fiscal year, Ocean State legislators still have not decided on a balanced FY 2021 budget as hopes of further federal aid for states remain. Due to deadlines with preparing the ballot, reaching agreement on general obligation bond requests—recently increased by the governor from $268.8 million to $496.8 million—may take precedence.