Rhode Island Public Expenditure Council

• RIPEC’s latest report examines the state’s fiscal outlook ahead of the fiscal year (FY) 2025 budget process. The report highlights the financial pressures the state will face after a period of flush budgets fueled by federal funding and general revenue surpluses. Finding that abundant federal funds are now expiring and that state general revenues for FY 2024-2028 are projected to grow at less than half the rate of the previous four years, RIPEC’s report highlights the challenges policymakers face in managing spending expectations, while also needing to tackle serious policy needs, including health and human services, K-12 education, transportation, and housing.
  • Providence Journal, “Inflated by federal funds, state spending ballooned. Now, this group is sending out a warning.”
  • Providence Business News, “RIPEC urges fiscal ‘restraint’ for FY 2025 state budget.”
  • WPRI, “Nesi’s Notes.”
  • The Public’s Radio, “Rhode Island politics roundup.”
  • WJAR, “Medicaid rates expected to be big issue for Rhode Island lawmakers.”

• Providence’s Special Commission for Taxation and Revenue released a series of recommendations to improve the city’s tax structure and stabilize its budget, which is projected to face a $7 million deficit in FY 2025. Highlighting these recommendations is a five-year, phased in reduction of the commercial tax rate, which is the highest in the state. RIPEC President & CEO Michael DiBiase, who served as Vice-Chair of the Commission, told the Rhode Island Current that high commercial rates discourage investment, and that a reduction is necessary to create a “more competitive and less punishing” tax structure for businesses and developers.

• Asked by the Boston Globe what he would like to hear in Governor Dan McKee’s State of the State address, Michael DiBiase pointed to three areas: “1. More urgency to improve student outcomes in our K-12 schools, including a constitutional right to education. 2. A robust plan and new approaches to produce affordable housing. 3. Improvements to Rhode Island’s business tax climate.”

• The Providence Journal highlighted RIPEC’s December report on empty seats in Rhode Island classrooms. The General Assembly has signaled an end to pandemic-era, broad-based hold harmless policies, which have shielded districts from enrollment losses, while RIPEC found that district schools have seen enrollment fall by 7.9 percent since 2019, and some districts—including Providence—have lost over one in six students in four years.

Inside Insights

• The Rhode Island Department of Education released district and school report cards for the 2022-23 school year. The report cards present a decidedly mixed picture for educational success in the Ocean State, with fewer schools rated at three stars or higher on a five-star scale than the year before.

• Pent-up demand continued to inflate home prices in Rhode Island, according to data released last month by the Rhode Island Association of Realtors. The median price of a single-family home sold in Rhode Island was $431,000 in November, up 4.8 percent from November 2022.

• Rhode Island ranked 44th highest (7th worst) among states in an ADP Research Institute report on average wage growth for workers, with Rhode Island employees receiving year over year increases of 5.4 percent.

What to Look for in January

• Governor McKee is set to release his proposed FY 2025 budget tomorrow, January 18th.